In early 1990 dollar value against rupee was 25 Rs/- and today it is 60 Rs/-. In other words value of rupee has fallen by 240% since 1990. Fall in value of rupee is big reason of worry today for Indian government as this falling value affect adversely to common man. Fall in value of rupee means increase in inflation.
Falling money adversely effects finance ministry, petroleum ministry & companies who deals in dollar with foreign nations. Imported goods will become costlier but in export we will get advantage.
For middle class and lower class people, fall in value of rupee always bring troubles, every time rupee value falls our oil bill goes up & government increase fuel price as they don’t want oil companies to bear losses. As fuel cost goes up everything that depends on fuel cost observes price hike. This means transportation and distribution chain becomes more expensive and as a result cost of groceries and food items goes up & common man will again grab by Inflation monster.
This fall in rupee also affects our investments badly, stock market being sensitive in nature always react on fall in rupee price. Indian stock market is largely governed by FII investments. FII may react with fall in rupee value & may lead to massive departure of money from stock market & Indian economy.
This increase in dollar value also affects CAD (Current Account Deficit). Current account deficit is term associated with foreign currency. It is also known as trade deficit it means difference between income of import and export done by country. Increase in current account deficit means increase in difference between import & export incomes.
Current account deficit varies due to various factors, one of them is varying demand of Indian goods in foreign nation as export depends on that and other is falling value of rupee as cost of imported things increases due to it.
There were many media reports and expert opinions which says that dollar value may reach to 65 Rs/- in few months & to reduce losses government may raise petrol price by 10 -15 Rs/. Don’t get surprise if petrol will cost you 100 Rs/- per liter in future.
Ultimately we can say fall in rupee price is not only bad for economy but also for individual. If government will not take any step to stop this downfall in rupee value than rising Inflation will defiantly kill common man.
What do you think the fall in Indian Rupee affects you? Please share your comments & views in comment section.