How the falling rupee will leave you poorer?

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Already suffering from price rise? Get ready for some more as the falling rupee will make petrol, diesel, food, gold and even loans costlier. The rupee hit a lifetime high of 58.96 against the dollar. Take a look at how it will affect you and me.

How the falling rupee will leave you poorer?

Since we import crude oil, import of crude oil will become costlier, since our oil marketing companies will have to pay Rs 58.50 for the dollar, as against Rs 54 a few weeks back. So, they are likely to increase petrol prices for you and me, as they have done in the past when the rupee fell.

How the falling rupee will leave you poorer?

As fuel prices go up cost of transportation of fruits and vegetables goes up, pushing food prices even higher and hence inflation. This is not restricted only to fruits and vegetables, but across the entire food and retail sector. A 10 per cent depreciation in the rupee against the dollar is believed to push inflation higher by 0.60 per cent.

How the falling rupee will leave you poorer?

As inflation goes up, the RBI would be forced to keep interest rates at higher levels. Those planning to take loans like home loans and personal loans on hopes of falling interest rates, might be disappointed.

How the falling rupee will leave you poorer?

Since we import gold, importers would have to pay more per dollar of gold imported, pushing domestic prices of gold even higher.

Economic growth rates will remain subdued

As inflation in the economy rises, interest rates rise and growth slows down. This is because investment is low when interest rates are high. It also eats into savings, which is a huge catalyst for investment and growth.

Read more about: inflation, gold, petrol, diesel
Story first published: Wednesday, June 12, 2013, 8:39 [IST]
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