Otto Money Newsletter - 07 Dec 2025

Dear Reader,

This week, the Rupee’s sharp move to 90 against the US Dollar understandably caused anxiety. Most financial outlets have covered the immediate triggers - FII outflows, stalled US trade discussions and a widening trade deficit. Imports continue to outpace exports, and gold demand has surged again, all of which increase demand for the USD relative to the INR.

For much of the post-Covid period, we saw massive foreign inflows and that helped build the RBI’s dollar war chest. The RBI actively supported the currency by selling dollars from its reserve stockpile whenever pressure built up. But it cannot intervene indefinitely. Constant intervention invites speculative attacks, and more importantly, India needs a gradual structural depreciation of the INR to stay competitive. Our largest export - services - has been strong (the Nifty IT index is up 9.84% this month), but in manufacturing our productivity gap versus developed markets remains significant. A controlled depreciation helps bridge that competitiveness gap.

The impact of currency depreciation is felt most by the middle and upper class. You might have heard of the term - personal inflation. It refers to the fact that each family's consumption basket is made differently. Each household consumes differently, but higher-income families tend to buy more imported goods - electronics, overseas travel - whose prices rise faster when the INR weakens. Even though headline CPI gives food a large weight (45.9%), your own inflation rate is likely higher.

Protecting yourself against long-term INR depreciation is therefore essential. For most families, the practical hedges are (1) Foreign Assets and (2) Gold. This is where thoughtful asset allocation matters far more than market timing. If you’d like help designing a portfolio that accounts for currency risk, feel free to reach out to us at contact@wealthbeacon.ai.

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Click below to read our Market Update - a compilation of important metrics for you.

Warm Regards,

Wealth Beacon Team

1. If you have feedback or haven’t already gotten your portfolio analyzed and streamlined, you may write to us at: contact@wealthbeacon.ai .

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