Depreciating Indian Rupee: Why investors should not panic

The rupee depreciated 12 paise to close at 77.66 against the US dollar on Tuesday, sinking all time low. However, a depreciating currency need not always be a bad thing.

The rupee’s recent slide against the US dollar has distinctly understated its relative strength against a number of top world currencies, including the pound, euro, yen and yuan wherein rupee gained the most 6.21% against the Japanese yen. This shows that the macroeconomic fundamentals remain unchanged and still makes India one of the most attractive investment destinations in the world.

Depreciating Indian Rupee: Why investors should not panic
Source: Internet

Why investors should not panic

RBI is seeking to keep India’s macroeconomic fundamentals unchanged by raising the repo rate to keep the inflation under control and preserve the forex reserves.

The outperformance of the rupee relative to other top currencies in the world is an indication of how the Indian economy is resilient amid geopolitical conflicts and lingering impact of the Covid-19 pandemic.   

Market uncertainty can blur the vision with which you undertake an investment. But from the long-term perspective the correction in the equity markets gives an opportunity to invest in quality companies at a very decent valuation. Hence, you should continue investing through the correction because it will help you even out the cost of buying mutual funds or stocks. Once the correction is replaced by a rally, you will get full benefit. 

Wrapping it up

Generally, fluctuations and uncertainties in markets shake the confidence of investors but a well informed investor doesn’t panic in such situations.  

Living away from India, NRIs can have certain doubts about the Indian market. At SBNRI we strive to clear those doubts and help non-resident investors to choose from a wide range of assets based on their portfolio.

Fastest way to invest into Indian equities via Systematic Investment Plans (SIPs) in mutual funds on SBNRI App. 

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