r2i forum

I had kept some $20K in India with my parents. The dollars are lying in the bank lockers. I had hoped to keep them for diversification purposes. But now seeing that the dollar has declined 10% with respect to the INR is making me uneasy.

So what should I do with the dollars?

Should I cut the losses, sell them and put the Rs in bank FD? Should I deposit them as dollars in Indian bank and earn interest? Or wait to let this current slump pass and hope that the dollar would appreciate? Should I sell in small batches over a period of time?

Any suggestions would be very helpful.

Thanks.
ssppss

#2 is perhaps sarcastic.

Should I deposit them as dollars in Indian bank and earn interest?

Beats placing in locker any day, regardless of whether $ moves up or down, is it not?

Beyond the above, unless you want want to speculate with play money (that you are worried by the 10% $ decline suggests it is not play money), formulate an AAP and invest accordingly.

Dollars could have been kept in FCNR account and retained as dollars.

Generally hawala and black money goes in lockers and not dollars remitted or carried from USA. You should have opened FCNR account.

Right now, your best option is to convert into rupees or open FCNR account. In either case, if you are depositing over $5K at a time in an account, you will need declaration that has to be made at customs when bringing in over $5K.

Money in locker is as good as money under mattress and sure fire way of losing purchasing power to inflation.

Diversification is achieved by investing in various different classes assets. Keeping money in bank is neither diversification, nor investing. Perhaps diversification of cash holdings. However what does not make sense is why not keep these dollars in US bank if you are in USA. Why take them to India to keep in a locker.

In any case, what to do now - the suggestion is above.

Good Luck.

How come dollar will go up in few years?

Even if the exports decrease, other Investments from foreign will pour in and will continue.

I am confused with everyone saying it is cyclical. They said the same for stock market...and only I lost money in it.

Indian GDP will continue to grow....or at least it looks like.
Sad on one side and happy that my country's currency is appreciating.

Correct me...

The $'s in the locker are not black money, I earned it legitimately and paid taxes on it. There were a few reasons: The main reasoning behind doing putting them in the locker was that I had thought (about 10 years ago) that the indian economy might go in hyper-inflation mode and debt trap like the S. American contries like Brazil. So I thought keeping a small stash of dollars in easy reach might be a good idea (for my parents). I also thought that since the dollar always went up against the INR, it was as good as remitting as INR+interest. (I did remitted more in Ruppees as well.) Another reason was that it used to be tough to get foregin currency when we went out of the country, so I thought the stash of currency might help family (and maybe me) in foreign travels. But anyways, most of the things have not borne out. I know you guys might laugh at this, but this was the thought.

By the way, money was taken to India in small lots never violating goverment restriction, so I have no declaration certificates. I will check into FCNR. Can I get the money back in Dollars with it? What is the interest I can get?

Thanks

ssppss

#7:

I dont think anyone here said you should not hold dollars. Whether it makes sense to hold dollars or rupees depends on a few things that are specific to individuals.

Assuming holding dollars makes sense, placing them in a bank deposit (FCNR or US bank) dominates placing them in a locker because these deposits provide interest.

FCNR deposits are repayable in foreign currency at maturity. For interest rates, feel free to check bank web sites like those of ICICI, SBI etc.

OP.

You staashed $s 10 years ago. Then you already have earned the appreciation over a period of time. IN nutshell, even though Rs has appreciated but still you are not on the losing side. 10 years ago Rs. was 33-34 and now 40. In essence you already have earned 25%. (Sounds like a bond fund...:-)). You could have earned more....but hey we all are human and all could have earned more had we judged the crash in 2000....Go ahead and open up a FCNR. Or convert to Indian Rs. and Invest in SBI infrastructure Bonds...opened till June 9.

LLLLWhenR2I;28064OP.

10 years ago Rs. was 33-34 and now 40. In essence you already have earned 25%.

Devaluation History
Year Value of one Rupee (units per US$)
1970 7.576
1975 8.409
1980 7.887
1985 12.369
1990 17.504
1995 32.427
1996 35.433
1997 36.313
1998 41.259
1999 43.055
2000 45.000
2006 48.336
http://en.wikipedia.org/wiki/History_of_the_rupee

We are seeing a reversal in this trend for the first time. Depending on date that you cashed this, you may be at a breakeven point right now.