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Now friend turns foe, as rupee falls


Now friend turns foe, as rupee falls
Brace yourselves for a terse reply, if you decide to ask friends or relatives to bring anything from abroad, as buying from India maybe cheaper because of a dramatic rupee fall against the dollar.

I asked a friend if he could purchase an Apple 4S (32 GB) from Dubai, and he quickly got back to me on the calculation. “It will turn cheaper if you purchase from India, and he gave me the exact calculations.”


I realised my own folly, as a depreciating rupee against the dollar in the Indian context also translates into better value for each UAE Dirham (Dirham).

Until a year back one Dirham hardly fetched Rs 12. Today, one Dirham fetches Rs 14.96. So, a phone costing Dirham 3100, had become costlier by Rs 9300 in rupee terms, as the rupee has depreciated by Rs 3 against the Dirham.

Now, why has the rupee fallen against the Dirham? Countries in the Middle East keep their currency steady against the Dollar (they peg it to the dollar and do not have interbank trade). So, when the rupee falls against the dollar in interbank trade in India, one gets a higher price for every domestic currency in the Middle East and for most other countries as well.

The moot point is that friends and relatives residing abroad are not going to oblige, if you ask them to purchase an expensive item, since their local currencies fetch a better price when converted to Indian rupees. And if they do, we can safely say that they are economically illiterate, or are simply filthy rich to splurge.

In any case most of the stuff these days comes from China, whether you are in the Middle East, West or India itself.


Meanwhile, let's wait for some RBI action to prop up a sagging rupee, so we can make some fresh demands from friends abroad. And at this stage one can depend more on the RBI, then a lame duck government to act against the falling rupee.

Read more about: currency rbi
Story first published: Tuesday, May 22, 2012, 11:09 [IST]
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