Rupee plunges to all-time low against Dollar: What should you do?

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What’s happening to the US Dollar?

  • Due to the aggressive interest rate hikes, the dollar index has jumped more than 16% in the year so far. 
  • The relentless rise in the dollar has meant a huge depreciation in the Indian Rupee. 
  • The Indian rupee dropped to a record low of 81.26 against the US Dollar on Friday, due to  concerns over the pace and quantum of U.S. Central Bank’s policy tightening ahead.
  • The major concern is that a stronger dollar would prompt outflows from emerging markets such as India, leading to a decline in the Nifty 50 index. 

Rupee dollar news: What’s leading to the currency movement?

  • Factors such as volatile crude oil prices, FII outflows from equity amid tightening monetary policy, flight to safe currency such as the US dollar have led to the currency movement.
  • According to analysts, given the above factors, the rupee could further hit 82- 84 levels over the near-term.

INR vs USD: How to take advantage of currency movements?

  • You can take advantage of currency movements by investing in US stocks.
  • When you invest in US stocks, you not only earn the return on the appreciation of that stock, but also get additional benefit due to depreciation of Rupee against that particular currency. 
  • As seen from the chart below, you would have made an additional Rs 9 lakh through currency depreciation by investing in Apple stocks!

Rupee vs Dollar: What to do now?

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  • What’s happening to the rupee?

  • What’s leading to the currency movement?

  • What is the outlook for the Indian rupee against the US Dollar?

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