Rise in Dollar ($) value

We have seen continuous rise in dollar price compare to Rupee price. Dollar price use to remain 45 Rs/- and now it has cross 52 Rs/- . You might be thinking that change is only small 7 Rs/- this small change how it impact on your financial life. In this article we will discuss impact of rise in dollar price.As you may be aware that every country has to do import of certain thing as well as export goods manufactured locally. Most of payments while doing import/export are made in dollar.Consider simple example if someone export goods worth 1000$ than he will received payment of 1000$ = 52000 Rs/- (Considering dollar price 52 Rs/-) if someone is importing goods worth 1000$ than one has to pay 1000$ = 52000 Rs/-. Gold price in July,2011 were 45 Rs/- so if someone who make import of goods in July,2011 had paid 1000$ = 45000 Rs/- (7000 Rs/- less) than today. All importers pass on this loss to the consumer of those goods. Hence it causes inflation.Imports to India are of petroleum products, capital goods, chemicals, dyes, plastics, pharmaceuticals, iron and steel, uncut precious stones, fertilizers, pulp paper etc.Things which will get costlier due rise in dollar value are:-

Rise in Dollar Value

Petrol Price: –

As we are aware that petrol price are deregulated by government, as most of petroleum products are imported, oil companies will decide price of petrol based on value of dollar. If dollar value increased these companies has to pay more to import oil/petroleum products, these companies obviously pass on this loss to consumer by means of raising petrol price.

As petrol price rise local transport become costlier not only that as things/goods are not produced and sold at same place it also need transportation. Hence overall price of everything which needs transportation increases.(It causes Inflation)

Gold Price:-

Gold is not domestic product gold is imported from other countries in form of gold bullion or gold jewelry. As and when dollar value increases gold price also start rising. As one has to pay more money in terms of rupee to import gold

Foreign Travel:-

Cost of an airline ticket will cost you more as price of oil product increases. So if you’re planning to take a vacation or foreign trip, the impact on your personal finances is clear. If airfares rise, you might be forced to not buy that ticket, or find other ways to reduce your vacation expenses by making other travel arrangements or reducing the length of your trip, selecting cheaper accommodations, or spending less on food or other purchases.

Imported Items:-

Imports to India are chemicals, dyes, plastics, pharmaceuticals, iron and steel, uncut precious stones, fertilizers, pulp paper, other capital goods items, luxurious items etc.

As value of dollar increase one has to pay more in local currency.

Conclusion:-

Rise/Fall in dollar value always affects economy of country and us. Rise in dollar price some what causes inflation which affect our financial planning.