How the Rupee Usually Moves
In the last 15 years, one thing has been seen again and again. When the rupee falls sharply against the US dollar, it normally leads to a big move. (see the image below)
This move is usually around 20%. Sometimes it comes in just a few weeks. Sometimes it takes a few months. And in a few cases, it may even take one or two years. But whenever it happens, the move is strong and clear.
A Pattern That Repeats Many Times
Every time the rupee falls in a big way, the follow-up move is almost always decisive. There is some retracement later, but the main move usually goes close to 20%. In the current situation, the rupee has moved about 9% till 2 December. The USD/INR is trading near 90.2. If this move behaves like the last seven or eight times, then a total rise of 19% to 20% is possible.
What It Means for USD/INR Levels
If the same pattern continues, the pair may reach close to 100. After that, there may be some correction back to 95. But as per the past study, the next likely zone for a pause or stop looks to be between 95 and 100. It does not look like it will stop here and reverse right away.
How Investors Should Think About Allocation
Rupee-based investments and US dollar-based investments behave very differently in such times. The rupee keeps getting weaker against the dollar from time to time. Many stories are told that the rupee will go to 40 or 50, but this is not what the data shows. It is better to understand the price trend instead of believing stories.
Simple Ways to Ride This Move
A simple way to benefit from a falling rupee is to invest in US equities or buy gold. Both options usually give good support when the rupee goes down. They help balance your portfolio and can also give good profitability over time.
Final Thoughts
Understanding the rupee and dollar trend helps in making better investment choices. Thinking smartly about where to allocate money can make a big difference. Always stay aware of how the rupee behaves and choose investments that move well with it.
