Can US Bonds Offering 5.2% Yields Make 8% for Indian Investors?
· Business · Moneycontrol
US bonds currently offer yields of around 5.2%, prompting questions about whether Indian investors can achieve an 8% return after accounting for currency fluctuations and costs. Currency depreciation between the Indian rupee and the US dollar plays a significant role in determining final returns for domestic investors. The calculation involves factoring in foreign exchange risk, taxation rules, and remittance charges associated with moving capital abroad under Liberalized Remittance Scheme limits. Financial advisors note that while headline yields appear attractive, currency hedging costs can reduce net gains significantly. Investors must evaluate these macro factors alongside domestic fixed-income alternatives before committing capital to overseas debt instruments.
Why it matters
Indian investors exploring overseas debt instruments must weigh currency depreciation risks and high remittance costs against potential yield gains. The outcome directly affects portfolio returns for individuals seeking geographical diversification beyond domestic fixed-income assets.
Read the original report — Moneycontrol
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