Crash of the rupee and how it impacts you

The rupee has continuously fallen against the dollar this month. Last week it fell below the key psychological level of 56 to the dollar, its lowest level since September 2012, as the dollar rallied on worries about a potentially early end to the US monetary stimulus. The rupee has also been impacted by a weak China manufacturing survey, which increased concerns over the world’s second largest economy.

Here’s how a falling rupee impacts your investments

Where it hurts

> Companies with foreign currency borrowings or those importing raw materials from abroad take a hit.

> A weaker rupee may dampen FII sentiment as the value of their investments (in dollar terms) erodes.

> Foreign travel and overseas education become more expensive.

> Weakening rupee will raise the cost of petrol and diesel.

Crash of the rupee and how it impacts you

Where you gain

NRIs remitting money back home are effectively putting more money into their family’s wallets as they will get more rupees for every dollar remitted.

Export oriented companies and those with significant foreign currency revenues will benefit from the rupee decline. This is because they will earn more rupees for every dollar worth of goods sold or assets held.

Domestic gold prices are likely to receive a boost on account of the declining rupee. Individuals in global funds gain as the performance of these funds in rupee terms gets multiplied to the extent of the fall in the rupee.

 

Source : The Economic Times

http://economictimes.indiatimes.com/markets/forex/Crash-of-the-rupee-and-how-it-impacts-you/articleshow/20260015.cms

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