Imported goods prices set to rise as rupee weakens against dollar

Imported goods prices set to rise as rupee weakens against dollar

Imported goods prices set to rise as rupee weakens against dollar

Prices of imported goods, including petroleum products and smartphones, among others, are set to go up with the weakening of the rupee against the US dollar, fear experts.

Since February 1, the rupee has depreciated 0.42%, or 27 paise, against the US dollar, in just four trading days. There has been pressure on the rupee, as US investors are withdrawing funds from stock markets, fearing hike in interest rates by the Federal Reserve.

On Tuesday, the Indian currency ended sharply lower against the US dollar, at Rs 64.25 per dollar, showing a decline of 23 paise over the previous close.

"Any imported good, including oil would be costlier due to the weakening of the rupee," Govinda Rao, Member of 14th Finance Commission, told DH.

The hike in interest rates emancipates from US inflation numbers. The trigger for the dramatic move came on Friday, as US payrolls data showed average hourly earnings rose by 2.9% in the year to January, the fastest since 2009, setting in fears about wage-price circle.

Indian markets are no exception to the issue, with the 30-share sensitive index falling by 5% in February, and wiping off Rs 7,98,148 crore of investors' wealth in four trading sessions.

In fact, petrol price in Bengaluru, which was pegged at Rs 74.54 per litre on Tuesday, has been showing an upward trajectory this month.

"Imports are going to become more expensive, which will dampen their demand in the market," according to Dhanraj Bhagat, Partner at consulting firm Grant Thornton India.

Although Apple factors in the forex fluctuations while selling its iPhones, according to sources, in case the situation deteriorates beyond control, they might look again at rate revision.

Earlier, within days of Finance Minister Arun Jaitley hiking the customs duty on mobile phones in the Budget 2018-19, Apple raised prices for the iPhone by up to Rs 3,210 across various models. It had also increased the prices of the Apple Watch by up to Rs 2,510, according to information available on the company's website.

RBI data indicates that the consumer durable credit has gradually going down. In this FY18, it has declined by 13.6%, from Rs 2,080 crore in the beginning of the year to Rs 1,820 crore as of November 24, 2017.