Usual discussions on the fall in the rupee bring up macro-economic matters such as slowing economic growth, corporate earnings and market volatility. However, the woes aren't restricted to corporate corridors or the Dalal Street. For the common man, the falling rupee is going to hit where it hurts the most-the pocket.
From essentials such as food and education to foreign vacation and the swanky gadget you plan to buy, the falling rupee will hurt you in more ways than one.
The Main reason behind the falling value of rupees are as follows:
There are domestic and global reasons for the rupee’s free fall against the US dollar. Among domestic reasons are high current account deficit and growth concerns. On the global front, the recovery in the US economy is expected to prompt the central bank there to end the loose monetary policy by the year end. Anticipating this, foreign investors are pulling out their money from India to invest it back in the US, which is resulting in a scarcity of dollars in India. This is not India specific. All emerging market currencies are witnessing a similar capital flight. US recovery is also boosting the dollar strength.
Crude palm oil prices set the pace for prices of other edible oils. It is imported in large quantities and any rise in its price will add to the inflationary pressure.
India is probably the most important county in the world when it comes to gold, and for good reason: Indians are the largest holder of gold in the world; gold is estimated to make up 7% of all Indian household savings; India is currently the largest consumer of gold in the world accounting for approximately 30% of demand; over 90% of India’s gold is imported; from 2001-2011 India’s population grew 17.7%; by 2030 India is expected to be the most populated county in the world (Source: World Gold Counsel, Census of India).
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