Rupee's weakness: Achieve dollar goals with US funds and gold in portfolio
Published by Business Standard
Abhishek Kumar's role: Quoted
Abhishek Kumar explained that currencies of countries with stronger productivity, smaller trade deficits and lower inflation tend to hold up, noted that a weaker rupee makes gold costlier, and pointed to US equity funds for geographic spread and gold mutual funds for ease and liquidity.
What Abhishek Kumar said
Why does the rupee keep weakening against the dollar, and what does that cost me?
In my view, currencies hold up better in countries that have higher productivity, smaller trade deficits and lower inflation, so the rupee's long-term slide reflects those gaps. A weaker rupee also raises the cost of things priced in dollars. Even gold, which Indian families buy in large amounts for weddings, becomes more expensive to purchase.
Which funds can help me hedge against a falling rupee?
I see US equity funds as useful here because they add geographic diversification to a portfolio that is otherwise concentrated in India. For gold, I would suggest gold mutual funds, because they are easy to access and offer good liquidity for investors who want to hold gold in their portfolio.
In our words, from what he said in the piece. General information, not personal advice.
More of Abhishek's views on mutual funds
The article explains why the rupee has weakened against the US dollar, from broad dollar strength and US policy expectations to foreign outflows and inflation gaps. It discusses how dollar-linked goals such as overseas education and travel become costlier, and how US equity funds and gold can help hedge.
Publisher source
Rupee's weakness: Achieve dollar goals with US funds and gold in portfolio