magics gifs,entertenment: [Yaadein_Meri] How the depreciation in the value of INR beneficial for NRIs

Monday, 19 December 2011

[Yaadein_Meri] How the depreciation in the value of INR beneficial for NRIs

As received

How the depreciation in the value of INR beneficial for NRIs

Just month ago, on 16th November, 2011, the USD – INR exchange rate was 45.3150 that means to convert one USD to Indian Rupees you were need to pay Rs. 45.3150 but today on 16^th December, 2011 this conversion become very expensive and you need to pay Rs. 52.745 for one USD and there is almost 3.95% depreciation in INR for one month and 16.40% for one year. The below chart provides you with the details of one month variation in currency rates related to few currencies like USD, SAR, AED, KWD, BHD and QAR. The depreciation in the value of INR is on an average 3.5% for one month and almost 16% for one year. The situation is roughly the same with all most all other currencies.

Date	Currency
Date	USD	SAR	AED	KWD	BHD	QAR
16-Dec-11	52.7450	14.0005	14.2957	188.5335	139.2717	14.4210
15-Dec-11	53.6450	14.2053	14.5044	191.2583	141.3093	14.6318
14-Dec-11	53.7150	14.3596	14.6624	193.4482	142.8477	14.7903
13-Dec-11	53.2250	14.1587	14.4568	191.0278	140.8469	14.5829
12-Dec-11	52.8350	14.0269	14.3220	189.6702	139.5321	14.4458
9-Dec-11	52.0425	13.8319	14.1231	187.2271	137.5959	14.2449
8-Dec-11	51.7600	13.7895	14.0784	186.5621	137.1678	14.2020
7-Dec-11	51.7175	13.7689	14.0587	186.4843	136.9659	14.1805
6-Dec-11	0.0000	13.6825	0.0000	185.4033	136.1104	0.0000
5-Dec-11	51.4163	13.6825	13.9707	185.4201	136.1123	14.0919
2-Dec-11	51.2063	13.6265	13.9137	184.5046	135.5535	14.0320
1-Dec-11	51.4675	13.6974	13.9858	185.6054	136.2564	14.1068
30-Nov-11	52.2113	13.9009	14.1935	188.3231	138.2789	14.3161
29-Nov-11	52.0188	13.8799	14.1724	187.8158	138.0751	14.2949
28-Nov-11	51.9650	13.8749	14.1665	187.6759	138.0239	14.2896
25-Nov-11	52.2550	13.9294	14.2227	188.4356	138.5658	14.3459
24-Nov-11	52.0738	13.8749	14.1669	187.9199	138.0221	14.2896
23-Nov-11	52.3750	13.9920	14.2882	189.6664	139.1891	14.4101
22-Nov-11	52.3225	13.9868	14.2812	189.8309	139.1343	14.4046
21-Nov-11	52.1450	13.9518	14.2455	189.4530	138.7858	14.3685
18-Nov-11	51.3350	13.6666	13.9538	185.4848	135.9585	14.0747
17-Nov-11	50.9050	13.5839	13.8701	184.2963	135.1255	13.9899
16-Nov-11	50.7388	13.5334	13.8175	183.7219	134.6215	13.9376
16-Nov-10	45.3150	12.0997	12.3023	160.9328	120.3581	12.4622
One month Depreciation	3.95%	3.45%	3.46%	2.62%	3.45%	3.47%
One Year Depreciation	16.40%	15.71%	16.20%	17.15%	15.71%	15.72%

Note : above forex figures are compiled from Bloomberg . The actual conversion rate the remitter is going to get is much less than the figures shown above. The remitter wills get a rate after adjusting remittance banks/agencies commission. For eg. On 14-Dec-2011 SAR-INR conversion rate as per Bloomberg were 14.3596, but when you had remitted money on that day you would have got only 14.10

How this depreciation in INR benefits NRIs

For every USD, AED, SAR, KWD or other currencies appreciated against INR (few examples listed above) sent to India, the remitter is going to get more INR against the respective currency. For example, on 16th November, SAR 10,000 remitted to India was the equivalent of Rs. 120,997.00, on 14^th December; it was equivalent of Rs. 143,500.00 (the yearly highest rate). This is why remittances to India have sharply increased in the last few months. Now, as an NRI, you can take advantage of this fall in the following ways:

a) NRO/NRE Bank Term Deposits.

Now day's banks are offering very good interest rates for NRO and domestic deposits. Your savings helps you to earn annual interest rates in the range of 9.00 to 9.50% for a period of 2-5 years. With a view to providing greater flexibility to banks in mobilizing non-resident deposits and also in view of the prevailing market conditions, RBI has decided to to deregulate interest rates on Non-Resident (External) Rupee (NRE) Deposits and Ordinary Non-Resident (NRO) Accounts (the interest rates on term deposits under Ordinary Non-Resident (NRO) Accounts are already deregulated). Accordingly, banks are free to determine their interest rates on both savings deposits and term deposits of maturity of one year and above under Non-Resident (External) Rupee (NRE) Deposit Account and savings deposits under Ordinary Non-Resident (NRO) Accounts with w.e.f 16-Dec-2011. This will definitely help NRIs to earn more return on their investments in NRE/NRO accounts. Please keep in mind that, Tax will be deducted from the income earned on NRO deposits, income earned on NRE deposits are fully exempted from Income Tax.

b) Investment in Real Estates

The real estate prices are desperately down now days due to lot of economic and other factors. If you want, you can also consider additional investments in your real estate portfolio by way of adding a second house or residential apartment or land. This all finally dependence on the availability of surplus money and your desire to buy an additional home or piece of land.

It was reported in Business Standard that, to cash in on the rupee depreciation, non-resident Indians (NRIs) are making a beeline to buy property in India. Most of developers claimed a 25 to 30 per cent spurt in sales to NRIs over the last two months. Since August, the Indian currency has fallen by around 20 per cent against the US dollar. According to real estate companies, brokers, analysts and consultants, this has triggered a substantial rise in the volume of property-related enquiries from NRIs. The actual deal numbers have also gone up considerably. Many NRI buyers are even buying multiple units for investment purposes.

c) Investments in Company Deposits.

NRIs can invest in company deposits otherwise called Corporate Fixed Deposits from their NRO account. Good Corporate FDs are offering interest rates in the range of 9 – 10.50% (Eg. HDFC, KTFC etc)

d) Investments in Equity / Mutual Funds/ Commodities

I am not sure this is the right time to invest in company shares and equity mutual funds. Share market is very volatile now a days and nobody knows in which direction it's marching. If you are investing in equity/Mutual Funds because the markets are depressed, try and avoid a lump sum investment and strict to the time horizon and opt for a Systematic Investment Plan, as predicted the market will be more volatile in the coming days. You need to target minimum 3-4 years investment period for equity or equity based mutual funds otherwise deploy your surplus money in fixed income generating securities like bank term deposits, company deposits etc . Also, please keep the tax aspect in your mind before depositing your money in any of the investment options described above.

Best Regards

Prakash Nair