Who gets to bear the brunt of the tumbling Indian rupee?
The Indian rupee continues to fight its drawn-out battle and carries on its downward descend given the draining capital flow, high trade deficit, and anxiety over the stability of Eurozone. Falling to an 11-month low against the U.S. dollar, the Indian rupee has extended its recent losses much to the central bank’s worries about inflation and current-account deficit.
So, are you safe from the effects of the falling rupee? How does this really affect you?
The falling rupee has the power to affect everything, from your investments and savings, to your spending. Let’s review some ways in which your day to day life will be touched by the falling rupee and how you can check your finances from falling into disarray.
Effect on investments—imports, dealings in foreign currency
The depreciating rupee can hurt stock market investor on various fronts. Businesses that have borrowed substantial amounts of foreign currency or those that import their raw material from other countries are the ones to be most affected. The backsliding rupee is also disheartening FIIs since their investment value is deteriorating, and thus provoking them to withdraw their financial investment from the Indian markets.
The fall in the value of the Indian rupee has also made the Indian traveler wary of planning holidays to international destinations, since these trips have certainly become more expensive. For every dollar spent, one has to fork out more rupees. Agents and tour operators have hiked up the rates for their tour packages and one can expect further increase. This applies to even those who have booked their international holiday packages in advance, since it will be required to pay the additional costs due to the fall in the Indian rupee.
Food, fun and fuel
You may now not really look forward to your weekends, what with dining out, travelling, shopping and dining at your favorite pizzeria becoming more expensive.
The decline in the rupee has also caused the government to hike up the petrol prices, since the crude oil import bill has increased. As the rupee value goes down, you can surely expect a greater hike in the fuel prices.
Want to get your hands on the latest electronic gizmo? Make sure you budget a bigger amount, because as imported commodities are invoiced in dollars, you can expect prices of imported commodities to increase further.
Those industries that rely on importing raw material in bulk will also require raising their selling prices for the consumer. So you can expect cars and two-wheeler manufacturers to get pricier in the near future.
Got kids planning higher education in international universities? Be prepared to shell out more to cover their education and living expenses on foreign shores.
Those students who have opted to take education loans to fund their education also need to cope with higher costs, since loan amounts are disbursed in rupees, whereas expenses are paid foreign currency. So, if you are a parent, it’s best to be prepared to dip into your kitty to fund the shortfall.