India, along with Russia and South Africa, has emerged the most mature among 14 emerging forex markets in the world, a study here revealed. The study, carried out by Mecklai Financial using data from the last survey of central banks, said the three countries scored more than 50 on the Market Maturity Index (MMI), suggesting that they were more than halfway there as compared to fully mature markets such as the US.It said MMI enables a more tailored way of looking at different elements of mature and could assist central banks by providing direction to regulation. A key output of market maturity was ease of risk management, and according to the risk management index constituted by Mecklai Financial, Russia and South Africa remained in the top five, while India performed quite badly in 2007, ranking only seventh and quite far behind the leaders.
However, over the last couple of years, the Indian market had developed quite considerably, both in liquidity and sophistication, it said adding that in parallel the risk management index had also improved. In 2008-09, when risk management was particularly difficult in all markets, including the fully developed foreign exchange markets, India ranked first among all the emerging markets in the study. The study showed that Russia was by far the most mature market in terms of the MMI, while the Indian market which came second on MMI had the highest market sophistication index. South Africa, which was also highly liquid, was third with its MMI score very close to India.
It said India, together with Turkey, had the highest possible score on Derivatives Use sub index. More important, however, was the fact that India's score on the investor activity sub index was extremely low--indeed it was the second lowest to Thailand of all 14 markets. This indicated that the Reserve Bank of India need to increase market access for the investment community. The country also had a relatively low score on globalisation sub index, ranked sixth from the bottom ahead of China, Brazil, South Korea, Malaysia and Thailand. On the flip side, India was second highest to Russia on the real sector sub index, confirming considerable anecdotal evidence that Indian companies were extremely savvy and pro active in hedging their risk.
Source : centralchronicle.com