Will the participants of financial institutions advise potential clients currency risks and default involved in emerging market investment without just promoting investment and then lose entire capital later?
Will they bring confidence to the market by promising not going to devalue rupee again and taking ad hoc interest rates decisions?
In summary, major risks involved in stock and money market are currency risk, default risk, industry risk, interest rates risk and inflationary risk. Interest rates, defaults and currencies are three types of mass destructions in the financial world. Should think twice and thrice before investing.
How to hedge currency risk? Invest in market crashes and huge sell-off.
How to hedge default risk? Avoid debt instruments.
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