( www.economictimes.com ) – MUMBAI: Rising interest rates in the US and falling local currency have taken the wind out of hedge funds that weretaking leveraged positions in emerging markets such as India. The current spate of selling in the domestic market is largely attributed to these hedge funds who have been hit by rising cost of fundsand depreciation of the rupee.
Many hedge funds take leveraged positions in emerging market equities by borrowing cheaply in the US. Till recently, they were benefiting from rising stock prices and appreciating localcurrency. But now, the table seems to have turned. With interest rates in the US rising, these funds are feeling the heat.
