The rupee went down to a record low against the dollar on Wednesday as risk aversion in global markets added pressure on a currency already under fire from the country’s current account and fiscal deficits. The currency’s slide came just before Finance Minister Pranab Mukherjee said he had directed his ministry to boost efforts towards fiscal consolidation. Government spending has been a concern for financial markets and a factor pushing the rupee lower.
Earlier on Wednesday, the rupee fell as low as 54.46 per dollar, breaching its previous record low of 54.30 in December. It was last trading around 54.40 compared to a close of 53.79. The reasons for the rupee’s fall include inflation, fiscal deficit, current account deficit and global risk aversion, all of which have been well documented by commentators.
Here are some of its implications on your common life:
1. Travel: Since dollar becomes costlier, you buy less dollars for more rupees. And your expenses in the foreign country rise. So, till the time the Rupee doesn’t reach back a lower level than 50, it is inadvisable to spend on travels and tours.
2. Oil Prices: A lower rupee means costlier crude oil imports, resulting in higher costs of petroleum products for the common man. This means that you will have to take loans to buy oil/petrol/diesel in the next 10 years if the trend continues.
3. Imports: Cars, Computers, Notebooks, Casio digital diaries, Cameras, Mobile phones, Television sets, Branded Shoes Shaving systems would become costly. This means that you will have to suffice with Desi Brands at the current moment.
4. Foreign Education: A Higher dollar means your living expenses, college fees and travel rise and it will have a direct impact on your savings. Plan to study in India at the moment. Get used to see similar faces in Indian Colleges.
5. Jobs And Remuneration: Not only is the rupee falling, for some, the pay cheque may shrink as well. Every industry which is dependent on imports will have to face an increase in cost of production and operations. However, it is a good time for industries which earn in dollars.
Deal with the rise of Dollar. RBI is fighting a lost battle. Hope that a new Govt can get in some better policies for inflation & fiscal deficit.