1. Banks are unable to help you hedge the increasing cost of fees and expenses that you are likely to incur in foreign education when the rupee continues to depreciate.
2. The exchange rate risk that you face arises from the fact that your earnings are in rupees and expenses on foreign education will be in dollars.
3. While rupee appreciation would work in your favour, any depreciation will increase the cost of foreign education, but you may not be able to forecast the direction of the exchange rate correctly.
4. Therefore, you should try not to speculate on the value of the rupee, as currency derivatives may turn out to be a risky choice not suitable in the short term, and trying to time the market might create problems if the rupee appreciates.
5. Therefore, hedging is a better alternative, and you need to consider ways to earn dollar income from rupee investment.
6. International investing might be a good choice and you could consider investing in dollar-denominated bonds, ETFs and other similar products like international funds that invest in global markets.
7. You should, however, avoid risky investments, as some funds invest in a few countries or themes and may carry equity and country risks, while other funds are global only in name as they may invest up to 65% in India to provide tax benefit to investors, besides having high costs and small size.
8. You should, therefore, pick according to your need to earn a dollar income that will help manage your currency risk only to the extent and tenure required for protecting your foreign education needs.