Advantage NRIs, exchange your overpriced asset against an under-priced and promising asset.
The international currency of trade the US$ (Dollar) is heading towards a big correction, a ∩ turn (an upside-down /उल्टा U) against the INR (Indian Currency – Indian Rupee). Its a grim situation for the citizens of such nations if the internal as well as the external value of their currency goes down drastically. But the silver lining is, there is still time while one can exchange it against an undervalued asset. Another thing is, it can provide an opportunity to one specific community.
This community is called the NRIs. (The Non Resident Indians). We know the NRIs have sacrificed prime years of their life, sweat & blood to earn in the US$, the UK£ or other currencies. There is an opportunity to protect as well as multiply wealth, unique to the NRIs. Dear NRIs, you happen to hold this highly priced asset which you can exchange against an under-priced and growing asset. This is a call from our research team having deep analysis of the international trade, finances and investment.
Fundamental and Technical factors responsible for weakness of Dollar vis- à -vis the INR:
- PPP: The current INR price of around 81-83 to the US$ is quite bloated. In PPP* terms, the US$’s fundamental value is not more than Rs. 30 (INR) on an average. (Can be even less than 30 in many individual cases). (*Purchasing Power Parity).
- Over Supply: The US$ is in oversupply. Every kind of crisis in the US is solved only with printing more Dollars since 1971 when the US Dollar got off Gold Standard. Be it a health crisis or financial crisis or a natural calamity, print dollars and hand them over to the people (including the NINJAS*) to buy FMCG and Consumer Durables, throwing them again into poverty. (*People with No Income, No Job and No Assets); thereby pushing the crisis forward.
- Internal Devaluation: Prices of the utilities and daily consumable items which remained in a certain zone for many years have now broken out. Inflation has gone out of bounds in the US, UK and many developed nations leaving their respective currencies devalued internally.
- De-Dollarisation is becoming a reality across the world.
- India’s own strength: India’s own fundamental numbers are getting stronger by the day. These will never let its trading partner’s currency go up and up as it has, in the past 70 years. They are a country’s GDP, Export revenues, the kind of exports it is doing (commoditised or labelled), Current Account Deficit, Internal Debt, External Debt, etc. The biggest import bill for India was Oil and it has gained control over it by signing a unique pact with Russia and some other oil exporting nations.
- International Trade in INR: Latest News: ’18 Countries agreed to trade with Bharat in INR’. This news is a warning for people taking INR lightly.
- Technical View:
- Hit the Wall: The current rising trend of US$-INR may go up to INR 90 [+/- 2%] to the US$. This can be the lifetime highest level, although there are a few possibilities it reaches there. Once it breaks 79-80 zone, the first downside level to be achieved is INR 72. After it breaks 71-72 zone, another level is 65. ___________________________________________________________________
Wealth is created by buying an asset having a promising future when it is highly under-priced and is held tightly for a long term (10-20 years). This is called value investing.
Presently, if one is holding an overpriced, bubble asset, it can work wonders if he exchanges it against the INR. In fact, the NRIs are at a dual benefit if they exchange their thus converted INR into Indian Equities or directly invest US$ into Indian Equities. {*Riches Formula: Never intend to touch the top or bottom of any commodity or market.}
Indian Equities has shown very high growth in the last 20 years. It has risen 20 times. (BSE Sensex 3,000 in 2003 to 60,000 in 2023). Similarly, in the next 5-7 years period they are going to give the world best returns on the basis of high and real growth that India would register.
The story of our great Bharat started from the year 1999-2000, has now caught speed with New India under its determined people and leaders. As per our opinion, INR shall get more and more enriched over the next 5-10 years. We are extremely bullish on India. (Since 2000).
Benefits continue till date:
In the year 2003, we had given a similar call to our clients (Email Dated 15-08-2003) to convert their US$ into INR at the price of Rs. 49.80/US$. Eventually, the Dollar went down to 39.10 till Dec. 2007 eroding it’s in price by 25%. The NRIs who invested accordingly benefited immensely. On their investment of 100,000 US$, they got 850,000 US$ if withdrawn in January 2008 (at the rate of 41). Just calculate the return: a whopping 63.86% (p.a.) CAGR (Compounded Annual Growth Rate)!
See example 1 below:
| Conversion of US$ and Investment in Indian Capital Markets e.g. BSE / NSE | |||
| Example 1 | |||
| Invested US$ 100,000/- | |||
| From Date | US$ – INR | INR | at BSE Sensex |
| 01-09-2003 | 49.80 | 49,80,000 | 3,000 |
| 31-12-2007 | 41.00 | 3,48,60,000 | 21,000 |
| Withdrew | US$ | 8,50,244 | CAGR 63.90% |
Since Dec. 2007, US$ – INR price has rallied up to current levels of 82-83 INR per US$ (from 39.10) which calculates to 5.06% compounded return per annum. The NRI investor is still at benefit: a net CAGR Return of 13% instead of the 5% appreciation in the US$ against INR. Although we don’t recommend converting your precious INR to the Dollar now which is on the edge of devaluation.
See example 2 below:
| Example 2 | |||
| Invested US$ 100,000/- | |||
| From Date | US$ – INR | INR | at BSE Sensex |
| 01-09-2003 | 49.80 | 49,80,000 | 3,000 |
| 31-03-2023 | 83.00 | 9,96,00,000 | 60,000 |
| Withdrew | US$ | 12,00,000 | CAGR 13.52% |
The table shows the NRIs could multiply their money much better instead of the US$ achieving new high against the INR when they invested their money in Indian Equities. This scenario will become bleaker for the US$ going ahead because we are looking at another period where US$ will lose its value faster against the INR. We expect to repeat an example 1 like situation going ahead.
What if we go wrong?
Even if we go completely wrong in predicting a big correction in the US$, your money will be safe and get a better return if they are invested (under an expert’s guidance) in Indian Equities. See table below. India’s capital market and industries at large will be flooded by foreign money in the coming 3-4 years. Better invest today to reap benefits. We recommend you to invest only under an experienced, knowledgeable and trustworthy consultant.
| Return from various assets | ||||
| From Date | To Date | US$ – INR | Dow Jones | BSE Sensex |
| 01-09-2003 | 01-04-2023 | 2.64% | 7.30% | 16.00% |
| 31-12-2007 | 01-04-2023 | 5.06% | 6.27% | 7.40% |
Consult us to get a holistic and systematic plan for conversion as well as prudent investment of funds with a mission of inflation* beating returns. (*Indian Inflation Rate).
#AdvantageNRIs, #US$, #INR, #us$toinr, #Indianequity, #NRI, #InvestmentinIndia, #NSE, #BSE, #opportunityinIndia
Amish Saraiya
Director.
Anand Wealth Consultants
Multipliers of Your Wealth