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    Indian Rupee: The Fall and its Ripples across the Indian Economy

    When the rupee falls against the US dollar, it costs more rupees to purchase dollar-linked goods and services. In other words, the Indians have to pay more against the Dollar. This would imply higher rupee expenditure on imported products and services.

    The depreciation of the Indian rupee against the US dollar may appear to be a purely macroeconomic issue. If you dig a little deeper, you will discover that it impacts every Indian in various ways.   

    Rupee
    credit:source

    Fuel prices – diesel, gasoline, and cooking gas – will rise more since India is heavily reliant on crude oil imports. Rising transportation costs will have an indirect impact on the things you use daily. Their costs will rise as production and transportation expenses associated with oil rise. Electronics are also expected to be costly. Devices such as mobile phones, laptops, televisions, and solar plates, among other household electrical goods, will cost you extra because many of their components are imported.

    Education in foreign nations will become more expensive as the rupee’s value declines. Students studying abroad or wanting to study abroad would have to pay in dollars. They would have to spend more rupees to buy the same amount of dollars if the exchange rate was higher. This may necessitate a review of their budgets. If you take out an education loan, your loan amount will rise in rupee terms, as will your equated monthly installments (EMIs).

    If you have plans to vacation overseas, be aware that it will be more expensive and may surpass your budget. For example, if you planned to buy $10,000 when the Indian rupee was 75 per dollar, you would have to pay Rs 7.5 lakh. However, with the rupee’s value plummeting to 78, you’ll need to pay Rs 30,000 more to get the same number of dollars in your pocket.

    If you already have investments in US stocks, the fall in the value of the Indian Rupee will benefit you

    For example, suppose you purchased 100 shares of business ‘A’ for $10 when the rupee-dollar exchange rate was 70. This means you spent Rs 700 on each share, for a total investment cost of Rs 70,000 ($1000) in Indian rupees. Assume the stock is now worth $15. In US dollars, your total value is $1500. In rupee terms, assuming the exchange rate remains at 70, the total value of your investment is Rs 1,05,000. However, because the currency rate is currently at 77, you will receive Rs 1,15,500 – an additional Rs 10,500.

    Inflationary pressures have been worsened by Russia’s invasion of Ukraine, as well as renewed Covid-19 lockdowns in China. Due to global supply limitations, demand outstripped supply. This caused prices to skyrocket in the world’s largest economy, particularly for houses and automobiles, with inflation rates not seen since the 1980s. Food inflation, which accounts for roughly half of the CPI basket, reached a multi-month high in March and is likely to continue high due to increasing vegetable and cooking oil costs around the world.

    Rupee
    credit:source

    For the first time in nearly a year, India’s foreign exchange reserves have fallen below $600 billion. According to the Reserve Bank of India’s weekly statistical supplement for the week ending April 29, the country’s foreign reserves fell by $2.695 billion to $597.728 billion.

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