The persistent weakening of the Indian rupee against the US dollar is presenting a powerful argument for Indian investors to look beyond domestic shores. Financial experts now assert that allocating a portion of one's portfolio to global equities, particularly in markets like the United States, is no longer just an option but a strategic necessity for long-term wealth preservation and growth in rupee terms.
The Dual Advantage of Global Diversification
A globally diversified investment strategy offers a two-fold benefit. Firstly, it enhances the potential for superior long-term returns when measured in Indian rupees. Secondly, and perhaps more crucially, it acts as a safeguard for an investor's purchasing power over extended periods. While Indian equities have delivered robust returns, fueled by strong domestic economic growth and rising corporate profits, the currency factor often tilts the scale in favor of international investments.
The core issue is not just stock market performance but the silent erosion caused by the rupee's value. An analysis by Vested Finance highlights that the rupee has been depreciating against the dollar at an average annual pace of roughly 3% for over a decade. The trend continued sharply in 2025, with the rupee losing 6% and hitting a historic low of 91 against the dollar. Although it has since recovered some ground, it continues to trade around the 89.50 level.
Rupee Depreciation: The Invisible Return Booster
This currency movement has a dramatic impact on final investment returns. Consider this illustrative example: if an investor had put ₹1 lakh into the Nifty 50 and the S&P 500 index simultaneously in 2015, the outcome a decade later would be revealing. The Nifty 50 investment, buoyed by a 232% rise in the index, would have grown to approximately ₹3,32,460.
However, the same ₹1 lakh in the S&P 500, despite a slightly lower index gain of 230%, would have ballooned to around ₹4,36,100 (assuming a conversion rate of ₹88.68 per dollar). This translates to an extra gain of ₹1,06,000, attributable solely to the rupee's depreciation. At the current exchange rate near 89.50, this additional return would be even higher, at about ₹1,13,200.
Harshal Dasani, Business Head at INVAsset PMS, interprets this data as evidence of currency being a powerful, though often invisible, driver of wealth over the long term. He points out that investors who allocated to US markets over the past decade benefited from a double advantage: the compounding of dollar-denominated equities and the structural fall of the rupee from the mid-60s to nearly 88 per dollar.
A Strategic Anchor for Future Goals
The implication is profound for financial planning. A portfolio concentrated solely in rupees is subject to the fortunes of a currency that is consistently losing global value. This can directly impede major life goals for Indian families—such as funding foreign education, international healthcare, overseas travel, or a retirement that may involve dollar-linked expenses.
Dasani emphasizes that the key takeaway is not to chase foreign markets opportunistically but to build structural diversification into one's investment framework. "Indian equities remain core for growth, but global equities serve as insurance against currency erosion and macro shocks," he advises.
Therefore, incorporating global assets acts as a crucial currency anchor. It helps preserve international purchasing power, balances risks concentrated in the domestic economy, and aligns a portion of one's assets with future liabilities that may be pegged to stronger foreign currencies. This analysis makes a compelling case for viewing global equity exposure as an integral part of a modern Indian investor's portfolio strategy.
