Thursday, June 20, 2013

How Fallen Rupee hits us

Dollar rates are increasing day by day and has created a bad impact on Indian Rupee. The Indian Rupee has fell very low against the dollar. The Value of Indian rupee has dropped approximately 8% from past 2 months. Current Account Deficit and Inflation rates may be one of the reason of the Indian Rupee falling more down in future. Check out the impact of the Dollar rise in India.

Education: People who are looking to go abroad for their studies, will have to shell out more money as the Dollar rates are increased. They will not only have to shell out more money on Education but also on their Accomodation and Food.

Travel: Many of us likes to spend holidays or to travel abroad. But now as the Indian Rupee has fallen to a very great extent, then they will have to reconsider on travelling abroad. The cost of travelling will be more expensive as compared to the cost in the past. For eg: Say, Last year you had been to America for 5 Days and the trip cost you around Rs. 5,15,000/- assuming the Dollar rate at 51.50 but now you will spend approximately Rs. 5,97,000/- assuming the dollar rate @ 59.70.

Cars: You are fond of the car and you always like to import the car from other countries. Now here you will face a lot of issues as explained above the rate of the Cars will increase too.

Oil Prices: India imports Oil from other countries and they do trade in dollars as a universal currency. Over here as the dollar rate has increased so will be the rate of the Petrol and Diesel.

Imports: India imports Oil, Gold and Iron ore from other countries and all such deals are made in Dollars currency. Hence the import will be very expensive for India and so will be the rates of Electronics, fuel prices and consumer products.

Exports: Depreciation in Rupee gives a lot of trouble in terms of expenses however Exporting commodities and other products will help us to get little more revenue. But having said that earlier this revenue will not help us to cover the losses as it India exports very few things into the market and is very difficult when there are competitors like China, Japan and Korea.

Companies: Hike in Dollar rates not only gives you loss but there are profits too. Oil and Automobile industries majorly depends on other countries hence there will be a worry to earn profit due to rupee getting weak. IT and BPO companies  will be in profit as most of them are outsourced from US hence they will gain revenue during this period. Also Pharmaceutical companies will be gaining revenue as they export more than import. Aviation companies will earn less in India as they will earn in Rupees but will have to spend in Dollars for fuels, etc.

Investments: This is the right time for the Non Resident Indians can gain more revenue. As the Rupee has depreciated, the  NRI's can go for buying the property in India as price of the property will cost them approximately 15%-20% less. For eg: Last Year, if the NRI plans to buy the house in Mumbai for $20,000 would get a 1 Room kitchen however as per the current rate he might get 1 bedroom-hall-kitchen for the same amount.

So here are my views about the Appreciation in Dollar rate and Depreciation in Rupee.

image source:http://www.thehindu.com/multimedia/dynamic/01491/rupee_thdvr_1491010g.jpg