It is a good time for a vacation in the United States. It is also a good time to invest in Indian stocks. This is because the Indian rupee is enjoying a rare and almost uninterrupted streak of appreciation against the US dollar. Consider this: On December 30th, I needed about 68 rupees to buy a dollar. Today, it only needs Rs 65. That does not sound very much in absolute terms, but it is an appreciation of 5%. In fact, the increase has been more intense in the last two months.
The battered Indian currency lost more than 3.5% in the early stages before finding support. The initial drop led to about 69 rupees against the dollar, a level that was unthinkable only a few weeks ago. The Sensex of Mumbai, the country's benchmark index, followed the lower rupee before mounting a recovery. The index has lost 11% of its value in the last month. "All markets are linked at this time," said Samir Lodha of Indian financial advisory firm QuantArt Market. "Growth is slowing, interest rates are very high, combined with the Fed's global stimulus problem and pulling out of emerging markets."