• Real Estate investment and devaluation of rupee

    It’s a great time to be a non-resident Indian (NRI) if you repatriate money to India or invest in the country. The rupee is falling and yesterday’s conversion rate is Rs 65.82 to a dollar, giving you more bang for the buck. One US dollar sent to India was fetching Rs 44 on August 1, 2011.

    As an icing on the cake, is the interest rates offered by the banks on the NRE FD ICICI stands at 8.75% and SBI at 8.5%. Axis is offering 8.9%.

    NRI investors wary of equity markets can now invest their dollar earnings in Indian bank deposits and get good returns.

    but the cake lies elsewhere, its the Indian Real Estate investment. This happens to be the best time to invest. WHY

    Imagine a US-based NRI who pays Rs 100,000 equal monthly installment (EMI) on a home loan. On August 1, 2011, his monthly outgo was $2273. but today his outgoing stands at $1516.

    In a chat with ET Now, Paul Mackel, Managing Director, Head of Asian Currency Research, HSBC, shares that in his view rupee might touch Rs 66 by this year end.

    Read more at:
    http://economictimes.indiatimes.com/articleshow/47538895.cms? utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

    So, if you are an NRI, you can expect to benefit from a weakening rupee for some more time, provided you keep your money invested in India.

    But caution follows the cheering. When you are purchasing a property there are logistical constraints such as identifying the right property, negotiating a deal, being able to repatriate large sums of money in outright purchases, completing all the necessary documentation and formalities, etc during the transaction life cycle. Generally a  purchase transaction may take a NRI buyer a period of 1 month to up to 3 months. During this period, the rupee may strengthen and the notional advantages that could accrue due to the rupee’s depreciation could be lost. This could get further compounded, if the purchase is not outright and the NRI buyer needs to either pay in installments or he is booking an under construction property as again there is no guarantee that he will continue to enjoy the benefits of a depreciated rupee during the payment life cycle.

    Read more at: http://www.moneycontrol.com/news/real-estate/falling-rupee-impactreal-estatenri-investment_908290.html#anchore_top_strip?utm_source=ref_article

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