Wednesday, July 17, 2013

How Rupee Depreciation affect your Investments?

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Call 0 94 8300 8300 (India)

Rupee depreciation does not only affect the country as a whole but its countrymen also.

 

Effect on Family expenses:

 

Fall in rupee increases country's import bill and Crude oil is the number one import item of India. This in turn increases the oil prices and indirectly the distribution cost which will affect our Grocery bills.

 

All this in combination hit negatively on Inflation and if inflation rises, then RBI may not even think of rate cuts in near future which means we have to continue with our High Interest Loan EMIs.

 

No rate cuts mean, slow growth of country and no foreign investment which may make the things worsen by Job cuts.

 

Effect on Investments:

As discussed above rupee depreciation reduces the interest of foreign investors in the country. We as Indians cannot support our country's stock or debt market as we only like Gold or Real estate. Our investment market is again dominated by foreign investors only. When they take out their investment, stock market is certain to fall, and debt yields will definitely rise.

 

All in all, Rupee depreciation is a very bad sign for Indian economy and we Indians too. Though there's nothing much we can do but not to buy gold in next 1 year to stabilize country's current account situation. Rest depends on government policies which again are more skewed towards their political agenda, as elections are due next year. These economic conditions are not in our hand to manage and thus we are not sure which investment is good to invest and when. So it's always better for investor to have proper allocation in all asset classes as per the risk profile to manage such kind of situation in a much better way.

Happy Investing!!

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