Bet on dollar-denominated assets, offset the impact of weakening rupee

Investors can take a few steps to counter the impact of a depreciating rupee

The rupee has weakened around 3.9 per cent against the US dollar over the past month. Investors need to tweak their portfolios to protect themselves against the impact of this phenomenon.

A key reason for the rupee’s depreciation is foreign institutional investors (FIIs) pulling money out of emerging market (EM) stock and bond markets. FIIs have pulled Rs 33,348 crore out of Indian equities over the past three months. “This has happened due to heightened risk perception in global markets, arising from the US-China trade war,” says Abheek Barua, chief economist, HDFC Bank. The Chinese Yuan has moved from 6.5 to