In my earlier article, I have explained why does rupee value depreciate against the dollar currency and the various factors affecting the changes in the currency. As of writing this article, still the pressure on the Rupee against Dollar is more and we are seeing the further erosion on the rupee value. The impact on the economy is more if the currency value changes drastically. It has the positive and negative impact on economy, inflation and lifestyle of people in a country.
It is not easy for a common man to understand the impact in his life because he doesn’t understand the facts about the economics of the country. But, it could be realized if he could read the various magazines and news channels on the similar topic. This article would put down those points in very simple terms to make the things clear for every one. This article explores the possible impact on our country if the value of the currency is further going down. If you have any doubts, please post it in the comments section. Subscribe to our future articles here.
1. Imported goods and Oil prices
In India, most of the electronics related goods are imported from outside are at least raw materials taken from abroad. If you want to own a gadget or television sets in the near future, it may cost more than what it was in the few months back. As we come to know, the mobile handset makers has hiked the prices very recently due to the rupee value decline. Every imported goods will see the rise in the price. This include hardware’s like computers,etc. If you are planning to buy a electronics now, you are going to pay more than what you would have paid six months earlier.
India is mostly depend on other countries for the import of Oil products. When rupee value is decreasing, oil companies has to pay more money to buy the fuel from abroad. I have earlier written about the oil price crisis in India and it has more details to know why the oil price is very high in India compare to other countries. Decrease is rupee value is one of the reason for oil price increase.
2. Foreign Education & Travel
Indian students who want to earn a foreign degree would have to spend more money for pursuing the education in abroad. According to the statistics, the existing cost of education and travel would shop up at least 10-15% because of the rupee value depreciation.
3. Importers and Foreign currency borrowers
If you closely looked into the results of the companies in the stock market, compared to the previous quarter the results are negative because of the currency value decrease. That too company having more debt in the foreign currency has to shell out more money to repay their loans. It would continue for the next quarter as there is no sign of improvement in the rupee value against the dollar currency.
1. Foreign currency remittances
The one who are getting more advantages on the rupee value decline is foreign currency remittances to India. For example, if your son is working in USA and sending money to India through remittances. You would receive the more money because of the rupee value. If you are in abroad and have accumulated more money in the NRE bank account, it is right time to make the remittances to India to get the advantage of rupee value decrease.
Apart from the working professionals in abroad, those who are getting money in the dollar currency for their work which is done in India also in the positive side. For example, you have a blog or website in that selling advertisement or advertisers paying through PayPal in the dollar currency would gain more in this scenario. There are millions of bloggers or small business owners who are getting advantages because of this rupee value depreciation.
When it comes to the industry, the exporters benefit more on the rupee value decrease. IT companies would benefit more because of their exposure to the foreign currency income. The companies like Infosys and TCS has gained more in the stock market because of their outlook in the coming months are very good due to the rupee value decrease. Apart from the IT companies, textile manufactures would benefit more in this scenario.
This is the another article on the rupee value decrease and its impact on the country. The above points are very high level and would give basic idea for you to understand who are benefited from the currency value changes and how it would impact the country’s inflation and macro economy. If you have any doubts, please post it in the comments section.
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