“The BEST Investment opportunity is provided only in times of CRISIS”.

Indian importers are aghast, shocked and caught unawares at the sudden fall in rupee vis-a-vis the US dollar…an Indian traveller, the Indian Govt. and the Indian Importer are in pain as they have to pay full 15 to16% more rupees today to buy 1 US dollar compared to a year back…

Have a look at the table below…

Time Period1 year ago6 months ago3 months agoCurrent
exchange rate
Date17 JAN 1116 JUNE1116 SEP 1116 DEC11
1 USD = INR45.4844.8447.4052.63
Rupee depreciation16%17%11%

While it takes us Indians approx. Rs. 52.63 today (16-DEC-11) to buy one US dollar, we could buy 1 USD by paying a mere Rs. 45.48 a year back. The rupee has depreciated against the US Dollar by a good 16% compared to a year ago (or should I say that the USD has appreciated by a cool 16%). What’s more, the sharp fall in the rupee against the dollar has been sudden, with 11% fall coming in last 3 months itself…

This has caused a huge blow to the Indian Govt. because OIL is India’s biggest import & oil price, although has remain range-bound in terms of dollar, but because it takes our Govt. more rupees to buy 1 US dollar today compared to a year back, the cost of oil imports has suddenly shot up catching the Govt. unawares… in fact, this has been sighted as the main reason by our govt. to increase the price of petrol this week…

The Indian traveller who was planning to pack his bags and travel to US or the Europe will think twice now as his cost of travel has suddenly shot up by a good 15%…

Similar is the plight of an Indian parent whose child/ward is studying abroad. This December they are forced to pay 15% to 16% more fees compared to last year because of a similar fall in rupee v/s the USD.
However, the most pain is being borne by the poor Indian importer who would not have imagined in his worst nightmare that he will have to pay upwards of Rs. 50 to buy 1 USD. If you are a traveller, you can cancel/postpone your travel, if you are a parent remitting education fees to your child studying abroad, you can pay the higher rate for the dollar now hoping that by next semester, USD would be much cheaper, but the pain is continuous and unavoidable for the Indian Govt. and the Indian importer is in a more precarious situation as he cannot stop importing good otherwise his business will stop growing.

However, to repeat my quote above…a CRISIS for one is an OPPORTUNITY for another…

No awards for guessing who is the biggest beneficiary of the 15 % rupee depreciation? The Indian EXPORTER…especially those who are exporting goods and/or SERVICES to the United States…

The Indian EXPORTER has had his diwali this year, not in the month of October but from October till now with rupee depreciating by 8% to 10% since diwali and their top line & bottom-line increasing in direct correlation to the depreciation of the rupee vis-à-vis the US dollar…

Our Indian Exporter is having a field day and the diwali is continuing till the date of writing this article…

But, besides the exporters, there are two more group of people who stands to benefit directly & immediately from the 15% depreciation in rupee….
And what more, if they play their cards well, they can benefit immensely from this unwanted but unavoidable fall in Indian rupee…

Can you guess whom I am talking about…?

Think hard….what is missing from the graphic below???

Those who “LOOSE” from the rupee depreciationThose who “BENEFIT” from the rupee depreciation
Indian Govt.???
Indian tourist & biz travellers travelling abroadForeign traveller planning to travel to India
Parents whose children are studying abroad???

Can you fill in the blanks above…. besides the Exporters, which 2 communities stand to benefit the most from the falling rupee??

Well, let me break the suspense here….

The 1st is the Foreign Investor including the FIIs (Foreign Institutional Investors) who have hordes of unutilised CASH lying idle in their coffers in the form of US dollars…that’s one of the reason I am not very concerned about the sudden fall in the Sensex…The FIIs, if they decide to invest in Indian equities today, stand to make a cool, risk-free 10 to 15% profit just by remitting money to India and converting USD to Indian Rupee…. So what my teachers taught me in school has some truth in it…

So, if we re-visit the above graphic… you’ve got one of the answers….

Those who “LOOSE” from the rupee depreciationThose who “BENEFIT” from the rupee depreciation
Indian Govt.Foreign Investors or the FII’s
Indian tourist & biz travellers travelling abroadForeign traveller planning to travel to India
Parents whose children are studying abroad???

Now I hope the FIIs read my BLOG, understand the logic of 15%+ risk-free return that I am writing about and start investing in Indian markets again….
But alas, that’s wishful thinking… My BLOG readers are not FII’s and FII’s are yet to become my BLOG subscribers, at least not in the near future…

So, for who am I writing this article… who is going to benefit by reading this blog article? Well YOU, my BLOG reader, if you know any NRI friend and/or relative and/or business partner. And to speak more directly, my friends who are residing/studying/working abroad… the NRI’s (Non-Resident Indian’s) and the PIOs (Person of Indian Origin’s).

So, now we complete the graphic above… finally…

Those who “LOOSE” from the rupee depreciationThose who “BENEFIT” from the rupee depreciation
Indian Govt.Foreign Investors or the FII’s
Indian tourist & biz travellers travelling abroadForeign traveller planning to travel to India
Parents whose children are studying abroadNRI’s and PIO’s

Yes, pick up the phone and give a call to your NRI / PIO friend/relative/biz partner sitting abroad, with dollars stashed away in his bank, probably worrying about his job, next salary, raise or about his business prospect, envying you and us Indians that we are living in the 2nd fastest growing economy when he/she/they are living in economies struggling to stay out of recession and earning a meagre 2 to 3% on his bank deposits when we Indians are earning 9%+ on our deposits.

Call your NRI friend /relative / biz partner not to tell the above but to tell him that NOW, since last couple of months; YOU & I have started to ENVY our NRI friend working abroad…

WHY???? Here is the reason…

If I am an NRI residing in US or Europe or for that matter anywhere else, having spare dollars (or for that matter any other foreign currency) with me that I do not need at least for a few months if not more, I shall immediately REMIT my foreign currency savings to my NRE account and end up buying rupee @ Rs. 52.63 for every US dollar. Had I remitted money last year or even 3 months back, I would have received either Rs. 45.48 per US dollar (1 year back) or Rs. 47.40 (3 months back) per USD…

So, by remitting money NOW, I gain a cool 11.0% more compared to say 3 months back & 15.7% compared to a year back…

Now, an NRI has two choices after he has remitted money back to India.

Option 1:
Start a NRE Deposit account and earn 2.5% to 3.5% return on his NRE deposits which actually is not bad as now his total earnings from this activity is a cool 18.5% (15% earned on conversion to rupee+3.5% on NRE deposits)…

Not bad compared to 3 to 4% max. that he/she might be earning on their local bank deposits…

(PN: interest rates earned on local deposits might vary from country to country)

However, if your NRI friend is of the more intelligent kind who takes pains to do some more research and /or takes professional advice from Wealth Mangers/Financial Planners, here in India, he will go for option 2…

Option 2:

So what is option 2?
step 1 remains the same. Transfer money to India by remitting your foreign currency to your NRE bank account and convert your USD or any other foreign currency to Indian rupee and pocket a cool 15% odd risk-free…

Step 2, rather than depositing it into a NRE Deposit a/c, you INVEST the rupees so earned into Debt-based Mutual Funds here in India….
Ok, did you know that already???? So what’s stopping you my friend??? Are you not happy with practically risk-free 20.0% + returns in one year?

There are two unique events playing simultaneously in Indian economy that presents a unique, never before, opportunity to our NRI friends to obtain / EARN a practically RISK-FREE return of 20% odd….

Not only the rupee depreciation is at its peak, even the interest rates in India are at their peak. We all know that… you and I are earning upwards in the range of 9.0% to 10% per annum on our Fixed Deposits with banks (although I believe it is foolish for an Indian do open a FD today… surprised, read my article “ The Rich Man’s bank Accounts:….( http://niravpanchmatia.blogspot.com/2011/03/rich-mans-bank-accounts.html)

I say that because while FDs are giving us 9 to 10% pa they are taxed @ 30% however some of the medium-term debt-based Mutual Funds in India are offering returns in the range of 10.00% to 11.25% per annum…and are taxed @ 10% even if I may be in the 30% tax bracket..
So step 2 for an NRI would be to INVEST his money from the NRE account to some of these, well chosen, debt-based Mutual Funds in India.
He therefore stands to gain a cool 25% to 26.50% returns on his surplus dollars that otherwise were lying idle in his foreign bank account or earning a meagre 3 to 4% pa.

Now, a final graphic for you… the table below shows 1 year return in case of 3 strategies that an NRI can adopt with respect to his surplus funds…

NRI money lying idle in his local bank a/cNRI remits money NOW to his NRE A/c & transfers it to NRE depositsNRI remits money to NRE A/c and Invests in debt mutual funds in India
Profit on conversion of USD to rupee0%15.0% approx.15.0% approx.
1 year return3.0% to 4.0% pa3.0% to 4.0% pa10.0% to 11.25 % pa
Total returns earned after 1 year3.0% to
4.0% after 1 year
18.0% to
19.0% after 1 year
25.0% to
26.25% after 1 year

Now, the returns from debt-based mutual funds are expected returns but past 10 years record shows that good, well chosen debt mutual funds have given returns as indicated within a range of +/- 0.75%. Only one caveat here, please take professional help before finalising the debt mutual fund for Investment.

So, how is that for a neat 25% return over one year with very little risk …

Isn’t it cool…. If you think so and agree with me, then I would request you to forward this article to every NRI/PIO friend of yours… he will definitely thank you from the bottom of his heart and probably gift you that ipad or the latest iPhone4…

Now, about DON2,

if Shah-Rukh Khan can dare to bring out DON2, can I not write JAAGO NRI JAAGO part II…

Await the sequel, as in my following article I am talking about NRI’s making a cool, hold your breath, hold it, hold it, 50%+ returns….

Wait, before you point a finger at me and raise doubts, this one is not without risks….it is meant for NRI investors who fulfill the below mentioned conditions:

1. They have the stomach to take risks
2. They are willing to INVEST for a longer time period of 3 to 5 years
3. They take professional advice here in India before creating their Investment portfolio
Yes, a cool, 50% return in 3 to 4 years is not bad, is it????
Wait for DON 2, I mean JAAGO NRI JAAGO part II…

If you buy things that you don,t need,
Soon you will have to SELL things that you need…

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