Rupee Depreciation: What Should Investors Invest In?
Investors can diversify their portfolio across export-led sectors and gold to mitigate the risks amid the depreciation of the rupee.
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.
This depreciation has been driven by factors such as steep US tariffs on Indian goods, persistent foreign portfolio investor (FPI) outflows in equities, a widening trade deficit and a strengthening US dollar globally.
A weakening rupee reduces the value of domestic savings, pushes import prices higher and adds to inflation, hitting sectors that rely heavily on foreign goods the hardest.
Investors may see diminished gains from fixed-income products and face greater risk if their portfolios lack hedging against currency swings.
Against this backdrop, investors need to plan how they will protect their portfolios.
An NDTV Profit analysis shows that in the last 15 years, there have been five such instances where the Indian rupee has declined by more than 5% in a calendar year:
2025: 6.3%
2022: 11.3%
2018: 9.2%
2013: 12.4%
2011: 18.7%
A falling rupee is a major concern for every Indian as it impacts spending, savings and investments. However, a depreciating rupee could be a positive signal for many sectors, especially those focused on exports and foreign operations.
A few assets could also help investors to safeguard their investments amid market uncertainties triggered by a falling rupee.
Generally, financial experts suggest that investors should avoid a panic reaction and adopt a long-term approach to gain from emerging opportunities in such scenarios. Here is a look at investment options investors need to watch out for amid the rupee depreciation.
Rupee Depreciation: Investment Opportunities
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.
