rupee weakened
The weakness of the Indian rupee is continuously increasing and on December 3, the rupee reached a record low of 90.14 per dollar. This is the third time in a few days that the rupee closed with such a huge fall. The fall of the rupee against the dollar is not just a problem of the economy, but it directly impacts every common man who buys everyday things, uses gadgets, repays loans or pays for children’s education.
Petrol-diesel and daily expenses increase
India imports large quantities of petrol, diesel and gas from abroad. When the dollar becomes stronger, the cost of these things increases. Its effect is directly visible on petrol pumps. As fuel becomes expensive, the cost of transportation increases and this increased cost is added to every day-to-day item like vegetables, milk, grocery, clothes etc. That means the weakness of the rupee starts a chain of inflation in the entire market.
Electronics and gadgets become expensive
From mobile phones, laptops, TVs, fridges, ACs to small gadgets, most products depend on imported parts. These parts are paid in dollars. Therefore, the fall in rupee forces companies to increase product prices due to increase in costs. Its impact is felt on everything from premium smartphones to LED bulbs and basic kitchen appliances.
stock market fluctuations
The weakness of the rupee also has a mixed effect on the stock market. Sectors like IT and pharma, which sell services in foreign markets, benefit because their earnings are in dollars. But automobile, electronics, steel and those industries which are dependent on imports suffer losses. Therefore the decline and instability in the stock market starts increasing.
Studying abroad and taking loans become expensive
The most direct impact of the expensive dollar falls on those families whose children are or are going to study abroad. Fees, living expenses and other expenses simply increase. Also, when inflation increases, RBI avoids cutting interest rates and sometimes has to increase interest rates. This means that home loans, car loans and personal loans all become expensive and EMIs increase.
Impact on common man’s savings and investment
Weakness of rupee brings inflation and increase in inflation means that more money will come out of the common man’s pocket. This reduces savings and the value of investments may decrease. This has a huge impact especially on people with fixed income.
Why does the rupee fall and what does it mean?
When the value of rupee decreases against the dollar, India has to spend more money buying goods from abroad, because most of the international transactions are done in dollars. This means that the more the rupee weakens, the more India has to pay extra for imported goods. Its direct effect is visible on inflation and expenses.