Rupee slide: How will it affect you
Bengaluru: Life isn't all about what we dream of.
That is the harsh reality some students are facing now with the continued downward slide of rupee. Their dream to get a foreign degree seems to remain unfulfilled as their parents will have to shell out much more than expected.
Rupee on Thursday plunged by a whopping 130 paise to hit a life-time low of 59.93 to a dollar in early trade. It later recovered ground and was trading at around 59.7 to a dollar in noon trade, but it isn't any good.
With fluctuating currency, students who go to other countries for higher education will have to pay more as their expenses will be calculated in dollars. Average fees for a course in US universities is over $40,000 and they need an additional $10,000 for other expenses. That adds up to $50,000. But that is now set to go up. That means, their loan amount will be much higher and they need to revise their budgets.
Students aren't lone sufferers. With prices of consumer goods set to rise, people will be paying more for everything, from cars to mobiles. consumer durables major LG electronics India has hiked prices of its home appliances by 5 pc from June 18, 2013.
Dr Shilpa Murthy, who recently got married, says: "We have got to set up our new home, but we are putting everything on hold for now."
Consumer electronics major Panasonic is also mulling a hike.
If depreciation continues, it will further increase inflation. If you are planning a holiday, this may not be the right time. The travel charges are expected to go up, leave alone your shopping and other expenses.
Domestic mobile manufacturers are already planning to increse handset prices as most of their components are imported. That holds same for automobile manufactuers. While most of the parts are imported, the manufactuers may not have any other option but to pass on the burden to customers in the form of increase in automobile prices.
Despite this, the government says there is no cause for worry. "We are not short of instruments ... We have a range of instruments to call on as and when needed, we will call upon them," Chief Economic Advisor Raghuram Rajan said when asked what steps the government is contemplating to check Rupee which slid to an all time low of 59.93 to a dollar after hitting 60 on Thursday
So, what's the reason for rupee depreciation? The government has hiked import duty on gold three times since 2012 including the recent hike by 2 per cent to 8 per cent to curb demand. Besides, the RBI too has put restrictions on banks on importing gold. Huge gold imports have put pressure on the country's CAD, which in turn is affecting the value of rupee.
He further said the Current Account Deficit (CAD) is large and the government is taking steps to taper it. "We have a Current Account Deficit which is large, but I believe we are on our way to tapering it ... gold imports are coming off their peaks," he said.
Post new comment