What a falling rupee against US dollar means for the common man?
The Indian Rupee fell to a record low on Monday, June 13, 2022, against the US dollar trading at Rs 78.14 per dollar. On Friday, June 10, INR had ended at Rs 77.84 per US dollar.
Why is the rupee falling? One reason for the fall of rupee is because of the rising inflation rate in the US, which has hit a four-decade high. Earlier, the US printed out trillions of dollars of currency to control the inflation rate and effectively exporting inflation to the outside world. The world uses the US dollar as its reserve currency.
Inflation in the US is not the only factor affecting the rupee. Massive selling by foreign investors is also taking a toll on the Indian market.
In May, the Reserve Bank of India (RBI) used a huge stockpile of foreign reserves to keep the rupee from reaching the Rs 77.5 level mark against the US dollar. Reports say in the coming few months, the rupee can fall even lower trading at Rs 81 per dollar.
$ 1= ₹.78.05
— Priyanka Chaturvedi?? (@priyankac19) June 13, 2022
New record…bottom
Thank you GoI.
How does it affect us? A falling rupee also affects the common man directly.
- It means that India’s imports will become costlier.
- Though it also means that the exports will bring in more revenue, India’s imports are higher than its exports.
- Crude oil imports make up a large chunk of India’s total imports. So, the rising import cost of crude oil means rising fuel prices for the common man. And rising fuel prices in turn affect a lot of other things connected to it.
- India’s inflation is already rising, pinching at the common man’s savings, and a falling rupee will only add to the squeeze.
- Moreover, those sending money from India to abroad for various reasons like education will also have to shell out much more money than they had planned to.
From fuel, and imported medicines to high-end gadgets, a lot of commodities will only get costlier for the common man, even as his/her income remains the same.