The rupee fell to a lifetime low of 69.62 against the US dollar in early trade on Monday, but recovered a little to 69.39. What does it mean for the common man? Everyone – from the common man to the corporate are impacted by the change in foreign exchange rate.
Here are the five ways in which it affects you:
Leads to increase in price of goods and services
A falling rupee makes imported goods costlier, especially oil. India imports around 80% of its crude oil. So besides the retail prices of petrol and diesel the consumer goods using imported raw materials become costlier and vegetables become dearer. This impacts inflation.
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Travel becomes costlier
An overseas trip- business or leisure – becomes costlier as you pay more rupees for the one dollar
Stock markets react
The stocks of companies which depend on exports such as IT and pharma gain as their earnings go up in dollar terms, while those which depend on imports like oil marketing companies and consumer goods firms feel the pinch. IT stocks gained on Monday, with the NSE IT index up 0.70% in afternoon trade.
The Central Bank has to step in
The Reserve Bank of India (RBI), which sets inflation targets, raised repo rate, or key lending rate, by 25 basis points. If inflation remains on the higher side, it could compel the RBI to keep policy rates high for a longer time.
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