How Does a Falling Rupee Affect You?
By Anupama Deshpande | May 07, 2018

In simple terms, fall in rupee or rupee depreciation means that the rupee is losing its value against dollar. If you need more rupees to buy other currency, then it means that rupee is getting devalued. Let's understand it by an example, suppose last year you needed Rs 60 to buy 1 dollar and now you need Rs 67 to buy 1 dollar, it means that now you have to pay Rs 7 more or 11.67% more to buy 1 dollar. It shows that the value of rupee has come down by 11.67%.

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Falling rupee affects our lives significantly. It not only has an effect on the household but also on various fields and sectors of our Indian economy. I have mentioned below, impact of falling rupee on different things:

• Flight tickets and hotel bookings will be more costly
• All other related expenses, such as sight-seeing, accommodation, local transfers and meals will increase as a result of the fall in the rupee

• Study cost will go up due to spending more rupees for payment of tuition fee
• Cost of living will increase
• People can reduce the effect of rupee depreciation if they know how to hedge themselves against currency fluctuations by using derivative products

• Falling rupee will increase monthly expenses
• Fuel, medicines, etc. will be expensive
• Due to increase in inflation, overall cost of household will go up

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• Lower increments will be there
• Companies will try to cut costs to cope up with the situation
• Pause in hiring will take place

• Exporters will get benefitted
• Software companies and other export oriented companies will get more rupees against income received in dollars

• Importers will have to suffer
• They will have to pay more rupees to buy dollars for importing

• People working abroad will be benefitted
• They will receive more rupees against earned dollar

• Oil prices will go up
• This could push up prices of other commodities
• Oil Marketing Companies (OMCs) will face losses

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• Non-resident Indians (NRIs) sending money home will benefit from the rupee's weakness, as they will get more returns for what they send

• Fall in rupee leads to fall in equity market
• Foreign Institutional Investors (FIIs) will take their money back to their country where they are seeing more growth opportunities and also no currency risk
• FIIs will tend to exit from Indian Equity Market
• Loss in equity portfolio
• Rise in inflation
• Situation of fiscal deficit will get worsen
• Investment made in International equity funds will give good returns

• There will be reduction of the interest of foreign investors in India
• More FII outflow will be there
• Interest rates are expected to come down in the medium to long term

• Gold prices will fall
• Interest in purchase of gold will reduce

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• Negative for real estate prices
• NRIs will find it cheaper to invest in real estate in India

• Increase in Current Account Deficit since our imports become more expensive
• India imports to meet over 80% of its oil needs and now oil prices have again gone up to USD 75 per barrel which would impact Current Account Deficit heavily

• Will lower Corporate Margin due to increase in input cost be it an imported raw material or local one

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