The rupee hit 80 to the dollar for the first time on Tuesday after breaking through a series of all-time lows and falling more than 7 percent this year from around 74 in early 2022, trailing a rampant greenback. What does this rapid weakening of the rupee mean for you? Here are your 5 point essentials: Higher cost of imports: A weaker currency makes international shopping more expensive as you have to pay more rupees for the same product than before. For example, if you were getting a foreign product for $1 in January, then you had to pay 74 rupees then. But with the Indian currency weakening to 80 per dollar, you won’t have to pay 80 rupees for the same product. The current trend suggests that foreign commodity prices could rise further due to expectations of further weakening of the rupee. Higher fuel and energy prices: India imports more than 80 percent of its oil needs, and a weakened currency adds to the cost of international oil and energy products. This will lead to higher fuel and energy prices for consumers in India as oil refiners and marketing companies pass on the additional burden of the exchange rate. Oil prices have risen 2 percent due to global factors, but 6 percent more due to the fall in the rupee. Higher Inflation: If the INR depreciates by 5 percent from the baseline (76 per dollar), inflation could rise by about 20 bps while GDP growth could be higher by about 15 bps through increased net of exports, as per RBI Monetary Policy. Report. Pay more for foreign education and international travel: The weakening of the currency will mean that you will now have to pay more for the same foreign education and international travel than before. For example, if the cost of traveling to an international country in January was $1,000, then it translated to Rs 74,000, but now you would have to pay Rs 80,000 for the same trip. The rupee has weakened more than 7 percent this year against the dollar, suggesting that education and travel in the US have become 7 percent more expensive in just the past six months. Upside – Indian exports become more desirable: A weaker currency helps exports and makes Indian products competitive in international markets. Exporters who used to get Rs 74 in return for a product worth $1 would now get Rs 80 for the same.
