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Rupee Slips to Lifetime Low of 70.26 Against the Dollar. Here’s How It Affects You

The impact of the rupee collapsing is not just limited to buying capabilities of the country. The slide in currency value will soon start inflating household expenditures and dent personal budgets.

News18.com

Updated:August 16, 2018, 9:43 AM IST
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Rupee Slips to Lifetime Low of 70.26 Against the Dollar. Here’s How It Affects You
Illustration by Mir Suhail/News18
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New Delhi: The Indian rupee recorded a fresh lifetime low during early trade on Thursday as it hit 70.26 per dollar.

The rupee was last at 70.1 to the dollar, compared with its previous close of 69.99 per dollar.

The fall in rupee was perpetuated by the plunge of the Turkish lira, which in turn helped the US dollar to gain. The fall in lira has spread the fears that the economic slump in Turkey could spread to other economies.

The impact of the rupee collapsing is not just limited to buying capabilities of the country. The slide in currency value will soon start inflating household expenditures and dent personal budgets.

The weakening rupee will make crude oil, fertilisers, medicines and iron ore, which India imports in large quantities, costlier. Though these items are not for your daily consumption, they impact your finances indirectly.

For example, since India imports roughly 70 percent of crude oil it consumes, a weak rupee will influence petrol and diesel prices. The already high prices may further rise.

Crude palm oil is also one of the largest imported commodities by India. This decides prices of other edible oils. Therefore any rise in crude palm oil prices will raise retail prices of edible oils as well.

FMCG, or fast moving consumer goods, such as soaps, detergents, deodorants and shampoos, of which crude oil is an input, are likely to become more expensive.

Pulses and oil, which account for a large part of India’s imports, will also be affected.

Students who have taken loans to fund their foreign degrees will also bear the brunt. Education loans are usually in rupees, but as students pay their expenses in a foreign currency, the cost of education and stay will increase.

Jobs may most likely be paying less as well. For industries dependent on heavy amount of imports will have to face a higher cost of operation. This may in turn reflect with shrinking pay cheques for employees.

The falling rupee is bad news for Indians off to vacations to a foreign country. Air fares may go up due to an increase in fuel surcharge. The stay will be getting costlier as well. Also, shopping will burn a hole in the pocket.

The depreciation of rupee will impact the automobile sector in three ways. First, input costs will rise, as these companies use imported components. Second, some companies will have to pay higher royalty to foreign parent firms. Third, many have foreign currency loans in the form of external commercial borrowings and foreign currency convertible bonds. Therefore, more or less all auto companies will have to increase prices.

The imported paperback, your favourite pizza and the latest laptop will also become more expensive.

Electronic consumer goods such as computers, televisions, mobile phones, etc, with imported components will also become costlier. International food chains which run outlets in India are not denying the impact on profitability.

Experts opine that the consecutive hike in RBI repo rate is also a contributory factor to the falling fortunes of the Indian rupee.
| Edited by: Ahona Sengupta
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