By Admin 
Indian Rupee: Most of the investors keep an eye on the stock market, but very few people pay attention to the movement of currency i.e. rupee and dollar. Whereas the truth is that rupee weakness can help in increasing your investment returns. Especially if you have invested in international mutual funds.
Investing in international mutual funds
International mutual funds invest investors’ money in foreign markets and foreign currencies like the US dollar. In such a situation, investment returns depend not only on the performance of the stock market but also on the dollar-rupee exchange rate.
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For example, if an investor invested Rs 1 lakh in an international fund at a time when 1 dollar = 75 rupees, his investment would have been equivalent to about $1,333. Later, if the dollar reaches Rs 85, then even without the market increasing, the value of investment can be around Rs 1.13 lakh. This means that one can benefit only from the weakness of the rupee.
Market performance makes a difference
If global markets also perform well, returns may increase further. Suppose the fund gives 8% return in dollars and the rupee depreciates by 3% during the same period, then the total effective return of the Indian investor can reach around 11%. International funds are important not only for currency gains but also for diversifying the portfolio. With this, investors can get the opportunity to invest in sectors like American tech companies, healthcare and global brands.
However, money does not always pay off. If the rupee strengthens, the returns may also reduce. Therefore, it is better to look at international funds from the perspective of long-term investment and diversification. It is generally recommended that investors keep 10-15% of their equity portfolio in international funds.
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