Now the rupee has broken the landmark barrier of 60 to the dollar, experts are left wondering whether it will fall to 65 to 70 or more. Many are now questioning how long it will continue to fall, and what the effects will be on India’s economy.
Opportunity in calamity
Whilst there are many obvious downsides to the rupee’s depreciation, there are also inherent benefits.
One of these has been highlighted in the Associated Chamber of Commerce and Industry of India’s (ASSOCHAM) recent study, which details the opportunities for new property investors.
The survey polled nearly 1,250 Indian real estate developers. The main findings reported that buying a property in India is the primary goal of many non-resident Indians (NRIs), and that the weakening rupee has given a boost to these ambitions.
Mr D S Rawat, Secretary General at ASSOCHAM, notes “It’s definitely not good news for people back at home, but for a non-resident Indian (NRI), this is definitely the best time to invest. At the moment any NRI buying a property in India can save around 20-30% on his/her property value.”
The fall in the rupee is a major problem for NRIs who have already invested in India’s property sector, who are reporting major losses in value. Many are having to make the tough decision of whether to sell, or try to weather out the storm.
In light of the rupee’s fall the Reserve Bank of India banned property purchases abroad earlier this month, and reduced the amount that could be taken out of the country by individuals from USD 200,000 to USD 75,000. Whilst many expressed fear over this control of capital, ASSOCHAM noted it is a “temporary step to curb non-essential outflows … With external sector stability returning in due course, the policymakers could roll back most of these non-structural measures.”
This echoes the cautiously optimistic voice of senior-level finance figures across India – many of who believe the depreciation of the rupee had been “over-played”.