Rupee at all-time low: Here’s how it affects the common man

The rupee fell to an all-time low of 77.44 against the US dollar on Monday (May 9) and this slump will impact common people, who are already burdened by high fuel and LPG prices.

Pressured by the strength of the US currency overseas and unabated foreign fund outflows, the rupee extended its losses for a second day as it fell by 54 paise against the US dollar.

Watch: IMF predicts bleak future for rupee

Forex traders said risk appetite has weakened amid rising bond yields in the US and mounting concerns about inflation that may trigger more aggressive rate hikes by global central banks.

At the interbank foreign exchange market, the rupee opened lower at 77.17 against the greenback and finally settled for the day at 77.44, down 54 paise over its previous close. During the trading session, the rupee touched its lifetime low of 77.52. On Friday, the rupee had slumped 55 paise to close at 76.90. In the last two trading sessions, the rupee has lost 109 paise against the greenback.

How weak rupee will impact common people

A weak rupee is bad news for the Indian economy which is already seeing high inflation. For the common people, the rupee hitting a record low will further increase their woes.

Fuel prices: With Indians already bearing the brunt of the hike in petrol and diesel rates, they are likely to pay more for the fuel they buy in the coming days. A depreciating rupee means the country will have to pay more for oil imports. Rising import costs of crude oil will directly impact the consumers.

Also read: I don’t own a vehicle… why should I worry about fuel price hikes?

Higher fuel prices will trigger the rise in costs of other goods. With rising fuel prices, transportation costs go up, and automatically the common man will feel the heat as prices of daily essentials will go up.

Costlier imports: It’s not just the perfumes and branded clothes. We buy a lot of imported product for everyday use, such as edible oils, rubber and iron and steel. When the rupee gets weaker, the prices of the imports go up, hitting our monthly budget.

Loan burden rises: When the rupee gets weaker, it tends to push up inflation, as import prices increase and commodities get more expensive. When inflation hots up, the RBI tends to raise the repo rate, as it did just last week. High repo rates translate into increased lending rates, making EMIs a bigger burden.

Vehicles, electronic goods: A weak rupee may also result in the costs of high-end cars and other vehicles increasing due to the import of some components. Also, electronic items such as laptops, TVs, and mobile phones may become costlier with imports of certain components.

Foreign education: In the last two years, people have been reeling under the impact of the COVID pandemic. It has been online learning during the pandemic and with coronavirus cases decreasing, educational institutions have reopened. Many Indian students are already studying abroad and there are plenty more who are looking to go to foreign universities this year.

With the rupee weakening against the US dollar, foreign education costs will go up. Parents will be burdened more to pay high fees. Many Indian students study in the US, UK, Australia, and other countries.

Foreign travel: Apart from foreign education, travelling to foreign countries will be expensive now. With the travel industry facing a major crisis due to COVID in the last two years, many were banking on resuming activities in the holiday season. Even though domestic travel has increased, those hoping to embark on holidays abroad will feel the pinch with the rupee value going down.

However, the rupee depreciation will have a positive impact on non-resident Indians (NRIs) as they tend to remit more money back to India as they gain more.