Weak rupee: Boon for some; bane for many

It is grim outlook for the nation as a whole. But, at the individual level, the rupee depreciation has come as the boon for some and bane for others.

First the good news. Dollars sent by Indian expatriates, for example, will make windfall gains compared to what they earned six months ago. “Each dollar is earning 5 to 7 rupees more,” said Delhi-based Prashant Ahuja, whose elder siblings are in New York and send back money for their old parents.  “It is time to cash in,” he said. Those who own stocks or mutual fund units outside India also have reasons to cheer as they will earn more in rupee.

There are many mutual funds in India, which operate on global level including Birla Sun Life, DWS Global Thematic Offshore Fund, Sundaram Global Advantage and Kotak Global. An official of Kotak Global said, “great time to stay invested abroad, but sooner the rupee rebounds, the losses will be as bad.”

Software exporters gain
Indian companies selling their services abroad too stand to benefit with each appreciating dollar or any other currency which is on the rising spree against the Indian rupee. IT major Infosys and Tata Consultancy are among some of the companies, which sell their services abroad.

But fall in rupee is likely to affect a vast majority on Indians in the form of higher oil prices. Since India depends on imports for 80 per cent of petroleum products requirements, rise in oil import bill will be passed on to the consumers. In fact, oil companies cited depreciation of rupee as the main reason for the petrol price three weeks ago.

If rupee continues to fall, the government could be forced to raise prices of diesel, kerosene and LPG, adding to the overall inflation further.  

Those planning to buy consumer durables such as cars, television sets, computers, mobile phones and the like should also finish shopping fast as imports of raw materials for these articles are expected to cost more with every rise in dollar as appreciation of the currency putting severe pressure on companies which import substantial amount of components from overseas.

There are already hints that car prices would be raised.  While the domestic tourism industry can celebrate the appreciation in dollar as this would increase tourist flow to Indian destinations, the outbound tourism might take a hit.

Although travel agencies have yet not complained on any loss of profit in the wake of rupee slide, there is no guarantee that their booking counters will be as crowded in the future, if the home currency continues to weaken further.