The Indian Rupee is on a downward spiral these days due to certain geopolitical factors and instability in crude oil prices. After touching the record low of 80 against dollars recently, the Indian currency is well on course to hit new lows, as per some financial experts. For people in India, this is not good news as they will have to bear the burden of inflation, however, for the NRIs, a free-falling rupee is not exactly bad news. In fact, they can capitalize on the same to make some good money. So, let us understand the ways in which the depreciating rupee can help the NRIs.
Deposits & Bonds Of NRIs Will Fetch Higher Returns
When across the world Central Banks have hiked interest rates to tackle inflation, the RBI also has followed suit by increasing policy rates, prompting Indian banks to spike interest rates across term deposits. Now coming back to NRIs, they tend to borrow funds from foreign financial institutions and plough these back into India for higher returns. The bank fixed deposit interest rates for NRIs have also risen by 10 to 20 basis points based on the term of the deposit.
This apart, the rest of the fixed income items like government bonds, corporate fixed deposits with revised interest rates, etc., have also risen in their values. Also, as a result of the declining value of the rupee, the deposits and bonds belonging to NRIs, which are maturing in India, have the potential to fetch them a very good value with regard to USD if they opt to convert them shortly.
Indian Stocks & Equity Mutual Funds Have Turned Very Profitable
Stocks and mutual funds are ideal investment choices for NRIs due to their capacity to offer attractive returns. The downward trajectory of the rupee and the latest correction in equity markets have turned the Indian stocks and equity mutual fund investments extremely gainful for NRIs who have been waiting patiently to invest their money. Also, the funds invested in offshore equities designated in US dollars would fetch more when calculated vis-a-vis rupee.
Gold Investment Can Be Extremely Attractive
The prices of gold usually share a robust link with the USD. So, the falling rupee is bound to have a cascading effect on the rates of gold and other valuable metals. The gloomy scenario with regard to the rupee can make the gold investment all the more advantageous to the NRI investors based overseas. Hence, several NRIs will opt to invest in gold when the prices of yellow metal or the value of the rupee go down and reap rich dividends when the prices go north.
Realty Investments Can Be Handy But…
For NRIs, this is the best time to invest in Indian real estate because rupee depreciation offers more value to the dollars. But therein lies a catch as well, real estate investment for NRIs can only turn beneficial when the rupee is in continuous fall. This implies that the NRIs can only benefit if they happen to be at the final stage of purchasing the property and waiting for fund remittance. This is because the process to acquire properties in India usually takes a minimum of 2 to 3 months for NRIs and by the time the rupee attains stability, then there won’t be any significant windfall for the overseas realty investors. So, NRI can only exploit the current scenario through realty investments if the rupee keeps on falling for some more time.
The Bottom Line
So, a fall in the rupee can be very advantageous for NRIs, but they need to be careful when choosing investment vehicles. Bad choices during uncertain periods can never fetch them anything substantial. Also, they need to diversify their investment portfolio during the periods of instability to minimize the risks associated with such unpredictable times.