Rupee Depreciation: What Should Investors Invest In?

The rupee plunged to an all-time low in intraday trade on Tuesday, Dec. 16, breaching the 91-mark against the US dollar for the first time. Currently, the Indian currency is hovering around Rs 90-91 against the US dollar. The rupee has depreciated by over 6% against the US dollar so far in 2025.

Export-Oriented Sectors

A few sectors, specifically export-oriented sectors like IT and pharmaceuticals, are poised to gain from a falling rupee. It could be an opportunity for investors to keep a watch on equity shares of companies in these sectors with a strong balance sheet, order inflows and expanded foreign operations.

Such companies are expected to see improved profit margins when the rupee declines, as they earn in dollars. Most Indian IT giants derive a significant chunk of their revenue from the US and Europe. A weaker rupee means more value in rupee terms for every dollar earned.

With a massive export footprint in the US generics market, pharma companies often act as a defensive hedge during currency volatility. Pharma companies also benefit by generating a significant chunk of revenue in dollars.

Gold

Gold prices in rupees typically rise during currency weakness, acting as a hedge against inflation and depreciation. Since India imports the vast majority of its gold, the domestic price is determined by two factors: the global price of gold (in USD) and the USD-INR exchange rate.

Even if global gold prices stay flat, the domestic price in India rises simply because the rupee has depreciated.

International Mutual Funds & ETFs

By investing in US-focused mutual funds or global ETFs (like those tracking the S&P 500 or Nasdaq 100), you gain from the growth of the underlying US stocks. As the US dollar strengthens against the rupee, your NAV (Net Asset Value) increases even if the stock prices stay the same.

To summarise, rupee depreciation highlights the importance of currency-hedged and export-focused investments. However, it’s important to note that a disciplined approach and long-term strategy could be helpful to minimise risks amid a falling rupee.