Written by Akash Mandal Mumbai | December 6, 2025 03:15 PM IST 4 min readWhile it may not be possible to completely insulate oneself from the risk of a depreciating rupee, targeted investments offer a way out. (Pixabay)The Reserve Bank of India (RBI) seemingly loosening its grip on the rupee, amid a host of other factors such as the delay in the India-US trade deal, the 50 per cent tariff on India, weakening Foreign Direct Investment inflows, and investors pulling out money from the equity markets. The result has been that the rupee has depreciated by around 5 per cent against the US dollar in 2025, falling past the 90-per-dollar last week to new all-time lows.But while financial markets have tools at their disposal to weather this storm, what about the common man – or at least the section of the populace that dreams of sending their children to a reputed foreign university or take holidays abroad? A weaker rupee makes all of this more expensive. For example, an annual tuition fee of $100,000 would be Rs 85 lakh at an exchange rate of 85-per-dollar. When the rupee weakens to 90, the same fee becomes Rs 5 lakh higher in rupee terms – more than twice India’s nominal per capita income of Rs 2.05 lakh in 2024-25. For those who have to finance their foreign education through loans, this is a big price to pay.Assuming no other cost changes – which is a big assumption in today’s tariff-hit world – vacations to the US would also become similarly expensive, as would importing goods whose prices remain unchanged in their own home country currency.Of course, it’s not like travelling to every country has become more expensive for Indians. But with the rupee the worst-performing currency in Asia in 2025, travelling to any country in the continent has become more expensive.Overall, a significant weakening of the rupee could affect most aspects of life, some more visibly than others. “In an economy, it is the consumer or the household who are the largest importer. Just look at the things around you, which you buy or have bought in the last 5-6 years. How much of import component is there (in these goods)?” said Anindya Banerjee, head of currency and commodities at Kotak Securities. If prices increase significantly due to a weaker currency, it may, in theory, hurt domestic demand, he added.The good thing for Indians is that retail inflation is at a record low, with the October print at a mere 0.25 per cent. According to the Reserve Bank of India (RBI) – which in October had assumed the exchange rate would average 88 per dollar in the second half of 2025-26 – a 5 per cent weaker rupee can raise inflation by around 35 basis points (bps).For those who have payments to make in a foreign currency such as the US dollar – parents of children studying abroad, for instance – a volatile exchange rate can become a big headache. While it may not be possible to completely insulate oneself from this risk, targeted investments offer a way out.Story continues below this ad“The options for hedging (against) this risk are fairly limited,” said Vishal Dhawan, founder and CEO of Plan Ahead Wealth Advisors. “The possible approach that retail individuals could take is to look at investing in assets which are dollar based, as part of their savings for a particular financial goal.”Also Read | GDP: Amid the rupee’s fall, how investors are shunning the Indian economyUnder the RBI’s Liberalised Remittance Scheme, individuals can send up to $250,000 every financial year abroad for certain current and capital account transactions, including travel, studies, medical treatment, and investments in foreign stocks, among others.“Goals like education are much less flexible compared to buying a car or a house. So that also has to be factored in. Assuming they (investors) are aware of it and have enough time horizon and invest in a staggered manner, it (equity) is a good option,” Dhawan said. © The Indian Express Pvt Ltd