Investing in EM currency ?

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bluejeansman
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Investing in EM currency ?

Post by bluejeansman » Sat Nov 12, 2011 8:53 am

Giving the example of India as thats what I am most familiar with.

Whenever I talk to my friends from India (but settled in Western countries), I find that almost nobody has heard of Boglehead philosophy or passive investing. I try to explain the concept to them, but they immediately ask me what kind of return on your money can you expect. I direct them to various wikis, articles on this forum as well as Merriman's excellent articles, and tell them that without taking "excessive" amounts of risk, say, for example, with a 60/40 stock/bond split, they can hope to get around 9% annualized return. But because of the 60% equity exposure, they should be prepared for 30% loss on their portfolio from time to time. Nobody is impressed with this response of mine. They say "I can easily get 10% return in fixed-term deposits (CD) in India on Indian currency(rupee) with *zero* risk. So, why should I bother ?" [Aside : Some of these people have also tripled / quadrupled their money by investing in Indian property over the last decade, but that's a different subject and beyond the scope of this post]

Actually, I am also stumped by this. Indian government banks have traditionally been very safe and have never defaulted to my knowledge. Last I checked, many Indian government banks offer 9% return on one-year rupee term deposit, and 10% for senior citizens. In the old days, say, couple of decades ago, I could easily explain this : Returns on savings deposits in western currencies were low, returns on savings deposits in Indian rupee was high, but the rupee *continuously* depreciated against Western currency. So it made sense, i.e there was no free lunch.

Fast forward to present, and Western fiat currencies have a big problem due to debt etc. Indian rupee has been kept artificially low by Indian Central Bank, but as the stock market recovers and foreign investor money flows again into India as it will, the rupee can only get stronger. The *continuous* depreciation of the rupee vs the dollar/pound will probably not happen in my lifetime.

Therefore what I dont understand is why Indian government banks still pay 9% on savings deposits. Perhaps because of inflation in India. But then I would also expect the rupee to get weaker and weaker against say the pound/dollar, because UK/US inflation is not that high compared to India. Yet, as I explained above, I dont think this is likely. So it is a bit of a paradox to me that I cannot follow.

Now I appreciate that investing in Indian rupee fixed-term deposit is not an option for everybody. But some people can, by wiring some money to relatives in India who are senior citizens and earn the risk-free 10% return as opposed to 60/40 lazy portfolio in US or UK.

I would particularly like to hear from Bogleheads on this forum based in the West but with ties to India.

Thanks for listening.

dickenjb
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Re: Investing in EM currency ?

Post by dickenjb » Sat Nov 12, 2011 9:44 am

There is a concept in economics called PPP (purchasing price parity). I believe it would hold that if near zero rates on the dollar persist and 10% returns on rupees persist, the rupee will have to be devalued vs the dollar. There is no free lunch (or samosa).

Also regarding your position "the rupee can only get stronger" - I have heard that before wrt real estate and tech stocks.

yobria
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Re: Investing in EM currency ?

Post by yobria » Sat Nov 12, 2011 10:14 am

The exchange rate was about 30/$1 last time I was in India. Now it's 50/1. And, looking at recent EM examples like Mexico and Argentina, it could be 200/$1 tomorrow. India's had a good run. How long will this continue? Who knows? Nothing wrong with investing as your friends are doing. But diversify - there is no free lunch, only risks you're not aware of.

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Re: Investing in EM currency ?

Post by Valuethinker » Sat Nov 12, 2011 11:19 am

dickenjb wrote:There is a concept in economics called PPP (purchasing price parity). I believe it would hold that if near zero rates on the dollar persist and 10% returns on rupees persist, the rupee will have to be devalued vs the dollar. There is no free lunch (or samosa).

Also regarding your position "the rupee can only get stronger" - I have heard that before wrt real estate and tech stocks.
Two different theories (but complementary):

- Forward Interest Parity - the cost of a currency forward (ie future lock in of exchange rate) is exactly the difference in interest rates between 2 currencies

- Purchasing Power Parity - the difference between 2 currencies adjusts with the relative inflation rates. So if India has 5% inflation and USA 2%, then in the long run, the Indian Rupee falls by 3% pa against the USD

The latter is:

- true only in the very long run for traded goods and services (and even then not perfectly so). Currencies show so much volatility that, say, on a 5 year basis, you cannot rely on PPP

- countries can still have different real interest rate cycles. So in theory, if you hedge currency exposure, you can still diversify your portfolio by investing in 10 year bonds of foreign countries.

However you have the cost of hedging, tax issues arising from same, and the general problems of being a small investor in a world where hundreds of billions fly around playing on these strategies.

Note the Indian government and banks may never default, but they can do some pretty nasty things to investors that don't count as default (Foreign Exchange controls and freezes, unilateral alteration of interest rates, 'rescheduling' at lower rates and longer maturities, withdrawal freezes, withholding taxes). The history of Emerging Markets has all of these machinations.

Norwegian Kronor or Swiss Francs are one thing: countries with over a century long record of democracy, respect for individual property rights and banking practices. Rupees?

I am bullish about the long term prospects for India, but would rather own the stocks. Huge governance risks. Periodic bubbles and smashes. Political interference. But the possibility of unlimited upside. Rather like investing in the USA in the 19th century: you had all the same issues re corruption etc, but if you won, you won big.

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Re: Investing in EM currency ?

Post by mamster » Sat Nov 12, 2011 11:26 am

Now I really want a free samosa.

Interesting tidbit: I just went to Google to search for the dollar-rupee exchange rate. As soon as I typed "1 usd in", it popped up " inr". So this is apparently a popular question.

I would have two problems with buying Indian CDs, which I'm pretty sure have come up before:

1. Currency risk. You can make very reasonable determinations about what the currency market has to do, but the currency market reserves the right to laugh at you and run away with your cash.

2. Transaction costs. How much does it cost to convert to rupees and back? I don't know. I'm asking.

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bluejeansman
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Re: Investing in EM currency ?

Post by bluejeansman » Sun Nov 13, 2011 8:36 am

Thanks a lot for the replies. To be honest, I did not follow all of the replies, particularly some of the finer economic points made about PPP etc.

==> dickenjb > I believe it would hold that if near zero rates on the dollar persist and 10% returns on rupees persist, the rupee will have to be devalued vs the dollar.

Are you sure ? I thought if Currency 2 yields much higher interest rate than Currency 1, it is Currency 2 that tends to appreciate due to "carry trade". At least for freely tradeable currencies. [However, I believe rupee is not freely tradeable]

Appreciate the point about Indian govt applying withdrawal freezes etc, right now I believe there is a $250,000 limit.

Appreciate the point about currency risk, unpredictability of currency movements etc but are curency moves really that unpredictable ? I gave my reasons : If anyone sees flaw in the argument, do point out. Currently the US dollar is considered (paradoxically) as a "safe haven" simply because of market turmoil. And, as the market recovers, as it eventually will, money will surely flow into India and other EM countries which will surely boost EM currency. (You need more rupees to buy Indian stocks). The US has NO other option but to deflate its way out of its $14 trillion debt. India also has selfish reasons to keep its currency low, to help its exporters, but India has no Compelling need to heavily deflate its currency. This logic seems quite compelling to me. Let me know if I am overlooking something.

I dont think Indian economy can be compared to Mexico or Argentina. Certainly not Argentina. Yes there is plenty of corruption etc, but Indian political instability is a bit exaggerated in the Western media, imo. Multi party democracy has been working reasonably well for the last 50+ years. India has always had a thriving media, almost comparable to the West. Governments have been fairly stable and generally last their full term. Yes, various vested interests with opposing idealogies suddenly join together to grab power, coalition parties rule most of the time, but so is the case in say, the UK now, for instance. India has gone on a full capitalist onslaught since 1992 and no matter which party comes to power, nothing is going to change India's economic approach a whole lot. The country has also got demographics in its favour, with a young working population etc.

==> Valuethinker > I am bullish about the long term prospects for India, but would rather own the stocks.

yes, but equities carry risk. I was talking about 9 to 10% return (similar to a 60/40 Boglehead lazy portfolio) with much less risk than the lazy portfolio.

Transaction costs : very minimal. I just write a US dollar cheque to my parents, and the Indian bank charges about $10 to $20 flat.

again, as I said, this option may not be available to everybody, and as I requested earlier, I would really appreciate an opinion from some of the Indian members (but based in the West) on this board. My question to you is : Do you favour a Vanguard-index-funds equities/bonds portfolio over simply investing the money in your parents' name in India in one of the nationalized Indian banks earning 10% savings deposit ? If so, why ?

Thanks again.

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Re: Investing in EM currency ?

Post by riverguy » Sun Nov 13, 2011 10:05 am

Can only get stronger? The rupee is down 10% to the dollar in the past year. So much for that 10% yield. The US has issues but we are still the safe haven. When Europe blows up, the inflow to the dollar is going to be epic.

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Re: Investing in EM currency ?

Post by yobria » Sun Nov 13, 2011 11:51 am

bluejeansman wrote:I dont think Indian economy can be compared to Mexico or Argentina. Certainly not Argentina.
Argentineans, being vastly more educated and wealthy than Indians on average, would no doubt feel the same way.

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Re: Investing in EM currency ?

Post by Valuethinker » Sun Nov 13, 2011 12:08 pm

bluejeansman wrote:Yes there is plenty of corruption etc, but Indian political instability is a bit exaggerated in the Western media, imo. Multi party democracy has been working reasonably well for the last 50+ years. India has always had a thriving media, almost comparable to the West. Governments have been fairly stable and generally last their full term.
1. Gandhi and the emergency period, forced sterilization etc. is not that far from the memories of most of us. Seen 'Such a Long Journey'/ read the book?

Had Sanjay lived, India might have become a dictatorship.

And the ruling family now? Wait... Gandhi....

The BJP has its own terrors: your very own mirror to islamicist parties. And Bal Thackeray ain't gone away, has he? The prospect of a war between India and Pakistan over Kashmir, orchestrated by BJP Nationalists (the RSA is presumably still out there somewhere, but one doesn't read much about it, now?) which could become a nuclear confrontation, must loom.

2. checked your neighbours? Pakistan has nuclear weapons, is running a long run guerilla war with you over Kashmir, and teeters on the edge of being a failed state. And has fought 4 (?) wars with you since independence.

Sri Lanka has won this round against the Tamils (a war which cost India its Prime Minister's life) but the issues which caused the Tamil rising have not been addressed, rather they have been buried under 10s of thousands of Tamil civilian bodies.

Burma we know about. Nepal? China? Bangladesh? Surprisingly stable that latter, but internal strife, islamic terror, crippling poverty and the worst location in the world if sea levels rise.

India has had FX crises before, and it could again. Spending 3% of GDP on fuel subsidies ain't a great way to start.

Look this is not just to diss India. India has fantastic people, some amazing educational institutions, great companies. It also has a state that is highly corrupt and dysfunctional, guerilla wars in many states with Maoist Naxalites, serious racial tension, is surrounded by failed states (and China) some of whom it has had wars with or around. Then you get the Tamil Nadu problem: they have the jewel of India (Bangalore) but they do not invest in it because the rural-based politicians don't win votes for building infrastructure for office parks full of non-Tamil people-- even if they work for Microsoft.

A related problem is the competitive impact of rising wages on India's service economy and exports. India's actual population educated to western standards is more limited than the raw numbers of college graduates might indicate. Western companies have 'onshored' when they found the cost-quality tradeoff of call centre staff just wasn't right-- and the turnover in Indian call centres is huge because of demand and supply.

India runs a 2 speed economy. A westernized sector based on software and outsourcing which is globally competitive and sophisticated and is backward integrating by buying western companies. And a manufacturing and traditional sector hobbled by restrictive labour practices, corruption, bad infrastructure etc.

And of course it has had the makings of a real property bubble in some cities (likely, like China at that stage, economic growth and urbanization will simply erase that. But when a flat in Mumbai costs more than it does in New York City....).

I don't think the Indian Rupee at 10% interest rate is 'safe' and I don't think I can prognosticate on its 'right' level against the USD. I see the case for owning Indian companies because of the wealth of talent there (worries about governance but that's not a solely Indian issue) and the upside.

But over 2.5% on a US Treasury Bond? I don't see it.

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Re: Investing in EM currency ?

Post by William Million » Sun Nov 13, 2011 12:45 pm

bluejeansman wrote:Thanks a lot for the replies. To be honest, I did not follow all of the replies, particularly some of the finer economic points made about PPP etc.

==> dickenjb > I believe it would hold that if near zero rates on the dollar persist and 10% returns on rupees persist, the rupee will have to be devalued vs the dollar.

Are you sure ? I thought if Currency 2 yields much higher interest rate than Currency 1, it is Currency 2 that tends to appreciate due to "carry trade". At least for freely tradeable currencies. [However, I believe rupee is not freely tradeable]

Appreciate the point about Indian govt applying withdrawal freezes etc, right now I believe there is a $250,000 limit.

Appreciate the point about currency risk, unpredictability of currency movements etc but are curency moves really that unpredictable ? I gave my reasons : If anyone sees flaw in the argument, do point out. Currently the US dollar is considered (paradoxically) as a "safe haven" simply because of market turmoil. And, as the market recovers, as it eventually will, money will surely flow into India and other EM countries which will surely boost EM currency. (You need more rupees to buy Indian stocks). The US has NO other option but to deflate its way out of its $14 trillion debt. India also has selfish reasons to keep its currency low, to help its exporters, but India has no Compelling need to heavily deflate its currency. This logic seems quite compelling to me. Let me know if I am overlooking something.

I dont think Indian economy can be compared to Mexico or Argentina. Certainly not Argentina. Yes there is plenty of corruption etc, but Indian political instability is a bit exaggerated in the Western media, imo. Multi party democracy has been working reasonably well for the last 50+ years. India has always had a thriving media, almost comparable to the West. Governments have been fairly stable and generally last their full term. Yes, various vested interests with opposing idealogies suddenly join together to grab power, coalition parties rule most of the time, but so is the case in say, the UK now, for instance. India has gone on a full capitalist onslaught since 1992 and no matter which party comes to power, nothing is going to change India's economic approach a whole lot. The country has also got demographics in its favour, with a young working population etc.

==> Valuethinker > I am bullish about the long term prospects for India, but would rather own the stocks.

yes, but equities carry risk. I was talking about 9 to 10% return (similar to a 60/40 Boglehead lazy portfolio) with much less risk than the lazy portfolio.

Transaction costs : very minimal. I just write a US dollar cheque to my parents, and the Indian bank charges about $10 to $20 flat.

again, as I said, this option may not be available to everybody, and as I requested earlier, I would really appreciate an opinion from some of the Indian members (but based in the West) on this board. My question to you is : Do you favour a Vanguard-index-funds equities/bonds portfolio over simply investing the money in your parents' name in India in one of the nationalized Indian banks earning 10% savings deposit ? If so, why ?

Thanks again.
Look at it this way. The Indians are offering the lowest rate they can in order to attract capital. The market has decided that the Indians have to pay 9 percent. I would be very careful assuming you know more than the market. I also disagree with your assertion that the Indian currency can only appreciate.

Even if India's long term prospects are bright, there's no reason you can't lose your shirt in the short-term.

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Re: Investing in EM currency ?

Post by marcos123 » Sun Nov 13, 2011 2:57 pm

bluejeansman wrote:
They say "I can easily get 10% return in fixed-term deposits (CD) in India on Indian currency(rupee) with *zero* risk. So, why should I bother ?"

Now I appreciate that investing in Indian rupee fixed-term deposit is not an option for everybody. But some people can, by wiring some money to relatives in India who are senior citizens and earn the risk-free 10% return as opposed to 60/40 lazy portfolio in US or UK.

I agree with William Million - the markets have determined the risk premium. And your proposed investment is most certainly not risk-free.

Having said that, your relatives resident in India could be considered to be subject to considerably less risk than you as a non-resident foreigner. Their investments may be generating local currency returns to simply meet local currency expenses within the country, whereas you, to recover your investment, would certainly need to consider cross-border risks including present and future capital and exchange controls, in addition to the underlying currency fluctuations, in order to recover your original investment, let alone any investment returns.

You would need to consider whether that premium is sufficient for you to cover those risks.

If you determine that that it is, relative to your other investment opportunities, then other non-equity alternatives to physically wiring your dollar funds to your Indian relatives could be investing in Non-Deliverable Forward (NDF) instruments denominated in Rupees; or in local-currency denominated bonds or bond funds. Investing in Rupee NDF's will mitigate some of the cross-border risk - but not all . Investing in Rupee individual bonds or bond funds additionally allows for potential fixed income price or NAV appreciation, but also exposes you to additional potential capital losses, if you sell the bond prior to maturity or exit the fund with a lower mark-to-market valuation than when you started.

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Re: Investing in EM currency ?

Post by stratton » Wed Nov 16, 2011 9:17 pm

The inflation rate in India is probably in the 8 to 10% range this year if the Financial Times is right.

Paul
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Re: Investing in EM currency ?

Post by Karamatsu » Thu Nov 17, 2011 2:20 am

My first thought for the interest rate was just the runaway inflation. Investors have been pushing yields up on government bonds and they, too, were in the 9% range (for the 10Y), before the RBI started buying bonds to artificially lower yields, Good luck with that. I suppose it's one thing if you're an NRI and can count on having some expenses in rupees, but for someone with no anticipated rupee expenses, you're introducing currency risks that an Indian national wouldn't have, or would consider less of an issue. Maybe the thing to do would be to compare the rates on bank CDs with federal bonds of the same duration, and also verify whether or not there is deposit insurance. We've all seen banks fail... no reason India should be spared. The winds of politics and power also blow pretty strong in India. Rough sailing, perhaps...

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Re: Investing in EM currency ?

Post by Valuethinker » Thu Nov 17, 2011 12:02 pm

stratton wrote:The inflation rate in India is probably in the 8 to 10% range this year if the Financial Times is right.

Paul
The inflation index in India, from memory, is heavily tilted towards staples: kerosene for cooking, cooking oil, sugar, wheat etc.

This does not mean that it is 'wrong' in any sense (because India has, numerically, the most people on subsistence level of any country in the world) but it does mean that it might not be 'representative'.

Reserve Bank of India has been raising rates due to fears re financial and property speculation: housing price bubble, I believe.

Also India has a persistent current account deficit, I believe (ie opposite of China).

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Re: Investing in EM currency ?

Post by Sunny Sarkar » Thu Nov 17, 2011 9:22 pm

Cash is nothing but very short term bonds.

Bond yields indicate the market's best judgement of the bond's risk(s).

For very short term bonds interest rate risk is small, so yields pretty much indicate principal risk - which is currency rate risk for cash.

The rupee's higher interest indicate the market's judgement that it carries higher currency rate risk.

Personally, I maintain only a small balance in my rupee account just enough to make the regular charitable contributions that I make. I do not "invest" in the rupee because I do not believe in taking risk on the fixed-income part of my portfolio.

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Re: Investing in EM currency ?

Post by katnok » Thu Nov 17, 2011 10:12 pm

Its interesting that I have come across this thread, couple of hrs after arguing with my wife against investing in India. As first gen Indians in the US, we have long term (~20 yrs) plans to go back to India. I have just maxed out my 403b and informed my wife that I was going to contribute to 457b which my employer offers for highly compensated employees. Having spent enough time reading this forum, I have no doubt in my mind that this would be the best thing to do. However, my wife has been very sceptical about the expected returns on the money contributed to these tax deferred accounts, and has always wanted to invest (property/savings etc) pretty much all the savings in India, which I am not really comfortable with.

Though, we would like to go back to India, its not certain as we have two young kids that were born here.
I have always asked myself questions about the circumstances where I would need to get money back to the US and how easy/difficult that would be.

I am pretty sure there are many first gen indians who have similar thoughts about investing India. As some of you have mentioned above, its hard to foresee issues with selling property, converting rupees into USD and paying taxes and all that stuff.

Any thoughts on what you guys in a similar situation would do?

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Re: Investing in EM currency ?

Post by Valuethinker » Sat Nov 19, 2011 11:56 am

katnok wrote:Its interesting that I have come across this thread, couple of hrs after arguing with my wife against investing in India. As first gen Indians in the US, we have long term (~20 yrs) plans to go back to India. I have just maxed out my 403b and informed my wife that I was going to contribute to 457b which my employer offers for highly compensated employees. Having spent enough time reading this forum, I have no doubt in my mind that this would be the best thing to do. However, my wife has been very sceptical about the expected returns on the money contributed to these tax deferred accounts, and has always wanted to invest (property/savings etc) pretty much all the savings in India, which I am not really comfortable with.

Though, we would like to go back to India, its not certain as we have two young kids that were born here.
I have always asked myself questions about the circumstances where I would need to get money back to the US and how easy/difficult that would be.

I am pretty sure there are many first gen indians who have similar thoughts about investing India. As some of you have mentioned above, its hard to foresee issues with selling property, converting rupees into USD and paying taxes and all that stuff.

Any thoughts on what you guys in a similar situation would do?
Hedge.

In this way. If India keeps converging with the rest of the world at anything like the rate of the last 10 years, then property in India is going to get very, very expensive relative to now (I have some doubts: right now a modern apartment in Mumbai costs as much as one in NYC, I believe, surely this is unsustainable?).

So one wants to own property in the town or city in which one will eventually retire in India (or a proxy). If that is in the countryside, so much the better: the people who have become richest in the last 20 years in India include all the people who had property near major centres like Delhi which have just exploded in size and population and yet India remains very rural compared to, say, China. That will change if India keeps growing at 7-8% pa (and its demographics are better than those of China in this regard).

One thinks of a retirement place in a Hill Station (if not, perhaps, Kashmir ;-)). Bangalore is perhaps now too expensive and busy but there must be other similar places in India?

Even if you never live in that property, eventually you may choose to sell it and buy a property you will retire to. HOWEVER:

- property ownership brings legal and other hassles. For example I believe Indian law favours tenants to the point of making eviction difficult or impossible? There are risks of expropriation etc. You have to be willing to take that on
- so if I had to have a mortgage on an Indian property, it would be a conservative one (and perhaps difficult to obtain in any case?) eg 50% loan to value or below

It's not predictable where India will be in 20 years. At a guess, Mumbai will be like an Indian Shanghai or Hong Kong (already is, but ie more advanced). Delhi will be huge (an Indian Beijing)-- just a giant sprawl. Places like (cannot spell) Ahmnedbad? (capital of Gujarat?) will be affluent because there are so many expat Gujaratis who are successful, investing back home. Bangalore seems to be strangling a bit (with business moving to Hyderabad and Chennai due to lower costs, less congestion) but it's still going to be important (but Mumbai and Delhia have grabbed back leadership). Calcutta seems to be on the move, at long last, and if Calcutta can change, then India can change.

As to other investments:

- I believe in maximum and global diversification of equities. Holding say 10% of your equity exposure in Indian stocks would be fine, but not more. The US is c. 45% of world equities and includes many companies with huge exposure to Indian growth (directly via investments, indirectly via customers or via service support eg Microsoft development centre etc.).

- on currency I believe in the long run currency differentials iron out (ie in buying power terms, excepting things like property which are not traded between countries)-- if you get a higher interest rate in India, in the long run Indian inflation will eat down the value.

- your major retirement income will be US Social Security, and that will be in dollars. In theory then, you should seek to hold more rupee assets. But given all the uncertainties about India's steady upward course (I believe in it, but I also believe in the risks), and my suggestion you consider buying a retirement property in India, that is I feel enough of a hedge.

I do think it's worth noting that many rich Indians put a lot of investment *outside* of India. Even they are not totally convinced of the India story, this suggests to me.

I will make one more observation, and please regard all of the above as:

1. Opinion not fact
2. Interested observer not someone with a deep knowledge of India


the last observation is that when we retire, being close to our children and grandchildren becomes increasingly important. If your kids make their lives in America, that is where you will want to be. You may well spend 6 months of the year somewhere nice in India, but you will want to retain ties and a way of living in America.

Therefore I conclude:

- maximize your low cost and tax resistant assets in the US
- diversify globally in your equities, but hold your fixed income in safe USD assets like TIPS etc.
- if you make additional Indian equity investments, make them relatively small relative to your total portfolio
- consider acquiring a property in India-- homes in India will cost *a lot* more if Indian GDP is 4x what it is now, in 20 years time. But don't overcommit on this score. A reasonable apartment is not a bad hedge, perhaps, rather than buying the large house you might eventually want to live in

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Re: Investing in EM currency ?

Post by ilmartello » Sat Nov 19, 2011 4:23 pm

Isn't equity investing in emerging markets the most efficient way to get exposure to EM CURRENCY?

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Re: Investing in EM currency ?

Post by nisiprius » Sat Nov 19, 2011 4:45 pm

bluejeansman wrote:Appreciate the point about currency risk, unpredictability of currency movements etc but are curency moves really that unpredictable ?
Look at this chart, which show a currency's value from 1983 to 2008, and tell me, in words, what you think it will do from 2008 to 2011.
Image
For the rest of the chart, showing what happened, look at this posting. Is it what you expected?

Also, look at what happened in September 1985. Was that predictable? The answer to that one is, surely, "no"--not unless you were inside the secret meeting that took place at the Plaza Hotel, when representatives of five countries met and decided that the dollar was too strong and needed to be weakened, and left with a plan on how to make it happen.
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