Five reasons why falling Rupee is a bad news for you

Let’s have a look at how continuous depreciation of the Indian currency will affect the common man.

Five reasons why falling Rupee is a bad news for you

New Delhi: The Indian rupee breached 73 mark against the dollar for the first time ever on Wednesday as amidst sharp rise in global crude oil prices resulting in strong demand for the American currency.

At opening today, the rupee touched 73.26 and weakened further. Foreign institutional investors (FIIs) sold shares net worth a net of Rs 1,842 crore Monday, provisional data showed.

Whether the currency would find its stable level or will continue to slide further remains a tricky question. But till the currency settles itself, let’s have a look at how continuous depreciation of the Indian currency will affect the common man.

Here are five reasons why the falling Rupee is a bad news for you

A weak rupee will increase the burden of Oil Marketing Companies (OMCs) and this will surely be passed on to the consumers as the companies are allowed to do so following deregulation of petrol and partial deregulation of diesel. If the OMCs increase fuel prices, there will be a substantial increase in overall cost of transportation which will stoke up inflation. International oil prices have seen an upward spiral lately and this could further add pressure on the rupee. On Wednesday Brent crude oil futures were at $84.86 per barrel, up 6 cents from their last close. US West Texas Intermediate (WTI) crude futures were up just 1 cent at $75.24 a barrel.

The sharp fall in rupee will further make a dent in the country's Import bill and thereby increasing the current account deficit (CAD). Importers will strongly feel the pinch of falling rupee as they will be forced to pay more on importing products.

The weakening rupee may also stress RBI's policy decision that is scheduled for Thursday. It may propel the Reserve Bank of India to hike interest rates further that will hike your borrowing. When RBI hikes rates, your EMIs are bound to go up.  Higher inflation, concerns over fiscal deficit are prime factors for the central bank to follow a hawkish stance.

The falling rupee also weighs on market sentiments. For those invested in the market may have to wade through rougher times. Depreciating rupee could trigger massive selloff in domestic equities.

Students who are studying abroad will bear the brunt most owing to depreciating rupee. Expenses incurred towards the university/college fee as well as that of living will shoot up, thereby spelling a huge burden on the students.

 

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