New Delhi, July 19: The Indian currency depreciated for the eighth consecutive session on Tuesday to fall past 80-mark against the US dollar for the first-time ever.
At the interbank forex market, rupee was trading at 79.93 at 9.31am, after breaching the 80-mark against the US dollar- a historic low for the Indian currency. It sank to 80.06 against dollar in opening trade.
The rupee had ended at 79.97 on Monday.
The US dollar extended its rally and hovered just above a one-week low reached overnight versus major peers as markets reduced the odds of a percentage-point Federal Reserve rate hike this month.
The local currency has now declined over 7 per cent since the start of this year. It was at Rs 78.94 per dollar as of June 30 and rapidly plunged to touch the Rs 80-mark in the next few sessions.
If we compare with historical data, since December 2014, the value of the rupee declined from 63.33 against a dollar on December 31, 2014, to 80.06 today -- that is, a depreciation of 26.27 per cent.
However, rupee's loss meant gains for the US dollar. In fact, the US currency has had a wonderful stretch. Since the start of the year, it has gained almost 8 per cent.
On the flip side, a rising dollar is surely not a favourable scenario for Indian rupee. The rupee has been staggering since the beginning of the year and has fallen 7.72 per cent so far.
The surprise rate hike by Reserve Bank of India's (RBI) monetary policy committee (MPC) last month could not stop rupee's decline as a widening current account deficit came to the forefront after the country's June trade deficit hit a record high, raising concerns. In fact, it seems to have heightened volatility.
How it may impact you
From imports to exports to travel abroad to foreign studies, a falling rupee impacts our lives in several ways.
Imports to be more expensive: The primary and immediate impact of a depreciating rupee is on the importers as they need to spend more for same quantity and price.
The basket of Indian imports includes crude oil, coal, plastic material, chemicals, electronic goods, vegetable oil, fertiliser, machinery, gold, pearls, precious and semi-precious stones, and iron and steel.
With the dip in the rupee, importing items will get more expensive. Not just oil but electronic items, such as mobile phones, some cars and appliances, are likely to get expensive.
The falling rupee is also likely to impact spending decisions of households as certain things may become expensive.
Boost for exports: While imports become costlier, exports from India will become cheaper. It is a boon for the exporters as they receive more rupees in exchange for dollars.
Pay more for foreign studies: For people looking to study abroad during this time, the fees amount will rise as a dollar would now cost more in terms of rupee than earlier. Prospective students or even existing ones may face a hike in their spending.
Foreign trips to cost more: Another major impact of falling rupee might be felt on the tourism sector. With Covid-19 cases remaining in control, many people would want to resume their abroad travel plans. Such people might end up spending much higher than they would have a few days back.
More values for remittances: In terms of remittances, or the money that people residing abroad send to their families back home in India, they will end up sending more in terms of rupee value.
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