Here's how the falling rupee could affect the common man
Makes oil imports costlier
The falling rupee leads to an increase in the cost of imported crude. Crude oil is refined to make petrol and since petrol is a de-regulated item and aligned to market rates, the oil marketing companies (HPCL, BPCL and Indian Oil) tend to increase the petrol rates at the retail level. So individuals may have to brace to for a fresh round of petrol hikes, if the rupee falls and crude prices do not. Fortunately in the last few weeks crude oil has fallen in tandem with the rupee.
Leads to inflation as imported items become costlier
Since imported items including crude oil becomes costlier, a fall in the rupee against the dollar tends to increase inflation.
Benefits NRIs
Non resident Indians get more for the dollar as the rupee falls. It particularly helps poor Indian labourers working in the Gulf countries, as the Gulf countries have pegged their currency to the dollar and there is no interbank currency trading.
Gold imports get costlier and domestic gold prices rise
Cost of imported gold gets expensive and hence domestic gold gets more expensive, unless globally gold prices fall.
Foreign travel gets expensive
Those travelling abroad who need to carry dollars, have to tender more in Indian rupees for every dollar. In short falling rupee ensures that those travelling/holidaying abroad now have to pay more.
Studying abroad gets expensive
Like foreign travel, studying abroad gets expensive.
Benefits export oriented companies
Companies like software development companies, engineering companies and pharma companies that export their products and services benefit when the rupee falls, as they now get more for every dollar of goods and services exported.
GoodReturns.in