Indian currency rupee against the dollar has tumbled to a historic low of 76.91 per US dollar on April 22, 2020 and as per reports it may touch levels of 80 as the pandemic Covid 19 brings with it a lot of uncertainty. Though, the pace of fall in the currency can be slower in comparison to other emerging market currencies as the falling crude has been positive for India.
So, as is learnt in this story that fall in rupee against the dollar has its rub-off impact on one's investments and your financial goal value might suffer, investors can consider parking in these financial instruments to hedge their downward risk from depreciation in the rupee.
Thus to tackle the crisis, while reports suggest that Indians have now betting on international stocks to safeguard their portfolio from high volatility back home, you with not much know-how on international markets can consider investment in these 2 mutual fund options:
1. Gold funds:
Gold during the month gone by has provided stupendous returns of 6% and even as the opening of worldwide economies after Covid led lockdown is lifting up risk sentiment among investors, other threats still are to its advantage such as the duration and extent of the fall-out due to the coronavirus crisis and the recent US-China tension over tariff.
And so herein for your future gold requirement and to hedge your risk in other investments, you can begin to lap up gold funds or gold ETFs. These are more secure and better bets than physical gold and free from other worries such as storage issues, purity, insurance etc.
As and when the need arises, the units can be redeemed at the then prevailing prices so investors would need to worry on exchange rates and other factors basis which gold price is decided such as demand and supply.
2. International funds:
Also, the rupee's weakness in the domestic shores as well as high volatility in Indian markets can be mitigated through investment in international funds which typically invest in securities listed in international markets or feeder funds i.e. an identified mutual fund in the international market. So, with investments made in foreign currency denomination, investors are provided a relief as hedge against currency movements in India.
Also, as there is high volatility, experts suggests taking benefit from interim-price movement and invests in these fund options via the systematic investment plan or SIP route.