Why the falling value of rupee is a bliss for NRI Investors?

Rupee has been losing its sheen from the time of independence. The value has reduced about 65 times and last week the fall of rupee has been the worst registered in the history of Indian economy. In the last week rupee has plunged from $63.77 to $66.02. There are several reasons for the fall of rupee compared to US dollar. Trade and Current Deficit being the major reason as the imports of resources has always been greater compared to our exports which leads to lesser foreign reserves. The imports are majorly petrol & related products, manufactured goods and electronic products. Until and unless the Indian economy doesn’t do away with its drawbacks and starts producing quality products itself this problem is quite difficult to be cured. The Indian government’s complicated investment policies, slow economic growth are also factors related to lack of attraction for the foreign investors.

Though these are the long standing reasons, the current reason related to crash of rupee is the influence of Chinese economy. The slowdown in China has not just influenced Indian market but has affected the overall world stock and currency market. The ordinary people of China started investing in the stock market which was not case prior to 2014. Around 40 million new accounts were opened for trading purpose between June 2014 and June 2015. This led to positive growth in stock market in contrast to the growth in the economy. Though the economy was not showing much boom and rather the export has been going down but the rising stock market was a paradox. The fall in the market was long feared by financial analysts and it happened last week. The Chinese index is falling and it doesn’t seem to recover anytime soon. This has also affected the Indian stock market as well. China has created tough competition for India in exports as well through devaluing its currency as a last step to save its economy. This step has created fear in the Indian market leading to a sudden crash of 1100 points in BSE as well as fall in rupee value.

How the decreased value of rupee has turned into a boon for NRIs

Though weakening rupee is a bad news for the authorities and residents in India, it has proved to be a boon to the NRIs. The value of per dollar has increased and they are sending in more money to home and encashing the opportunity. Foreign currency is flowing more from countries like Canada, US, Middle-East and Europe. The rupee has depreciated by 4% but inward remittance has increased by 25-30%. People who have better savings or who earn better keep cash apart to make use of such opportunities. Some people borrow cash from foreign banks and remit from India to earn more rupee in return. The banks in countries of Middle-East provide loan at 3 to 4 % whereas the interest rate provided on deposit in India is 7 to 8%.

Various investment options for NRIs in India

There are numerous investment options available to enhance the capital amount. Bank deposits, stocks, mutual funds and real estate are among the leading options for investment. This is a great time for NRIs to encash as the value of rupee is falling compared to dollar. The money remitted now would earn more rupee in return of the foreign currencies and in return provide more liquidity for investment. In spite of the slow down the Indian market has the potential to generate increased returns.Among the range of investment options

 The initial step to send the cash to India is to open a bank account:

The various types of bank accounts are NRE, NRO and FCNR which respectively stand for Non- Resident External, Non-Resident Ordinary and Foreign Currency Non Resident.

NRE account is the best option if one is looking to remit the cash in Indian currency. It is tax free and hence nothing has to be paid on the interest earned on the balance. This account doesn’t permit rent, salary or dividends. To transfer income and earnings one should hold a NRO account on which tax is implied at the rate of 30% plus the surcharge and cess & balance amount in the account is also susceptible to wealth tax. This account can be opened with a resident in India.

FCNR account is a great option for the residents abroad who want to be immune to the risks of currency exchange rates. In this account funds are not converted into Indian rupee i.e. it remains in foreign currency.

Bank deposits provide attractive interest rates from 7% to as high as 9% which is huge comparative to Middle-East countries which provide around 3 to 4% returns on the principal.

Stocks and Mutual Funds are other great options to earn huge returns on the principal amount. Long-term investment in stocks lead to lucrative returns on the principal amount. Mutual funds are also a great investment option as they lend attractive returns.

Real Estate is another segment from which one can earn good returns. The land and building rates are on surge as India is a developing economy and owing to this it is a lucrative segment to earn returns.

Moreover, with the introduction of Wellness Estate™ by TIPL, a Tybros Group initiative, NRIs have the option to not only invest in a secure investment option but also secure great returns in tune of securing a healthy future for their future generations.