Repercussions of a rupee downfall

Thursday, June 27, 2013

Repercussions of a rupee downfall



If you are offering services to a foreign agency, for instance, if you are working as a freelancer, then you are likely to benefit from the latest development. There has been a rapid rise in dollar valuation, which means that any money received in dollars is bound to increase your rupee value. 


 Image credit: mnsanthoshkumar / 123RF Stock Photo

On one, hand, where there is a lot of talk of rupee value collapse making things miserable for importers, there are unquestionably few pluses.  However, the greatest concern is the import section, which means there is every likely hood that the price of gasoline will rise, and it will also lead to more price increase on several fronts. 


At a time when the country is already reeling under the rise of gasoline prices in the aftermath of Iraq war, and the rise since then has not seemed to stop yet. Any further increase is bound to inflate the prices of several commodities. We are now close to witness further increase in several key petroleum products. To name a few, the price of cooking gas is bound to rise if not then the petrol prices will keep rising, in a way, both, somehow has the same results economically. 

Talk of petroleum products and you will see that  one area, which will also see a price increase, is the plastic based products. Plastics are made out of crude oil, and any increase in crude oil prices will directly affect the price of plastic based products, which includes the prices of all those food items packed inside a plastic vessel. 

Benefits of rupee downfall

However, there are few highly significant areas that have seen a rapid increase in benefits resulting out of a rupee downfall.  One area that is worth mentioning is freelancing, and secondly, the software service providers in India. In fact, all those firms that are providing services to US have suddenly started pocketing a hefty sum. Freelancers, in particular, are feeling bulged pockets, and though, no one knows, when this will stop, but till the time, the rupee keeps sliding or remains at this level, there is every chance that service providers in India will gain a lot. 

Travel and studies have taken a hit

Travelling abroad has undoubtedly taken a hit. Since most of the travel agents usually keep the measure in US dollars, there has been a precipitous drop in people travelling abroad, especially to US. Students who wish to study in US universities will now have to decide, whether to choose a US stop or look ahead to a more favourable European destination. 

Unless steps are taken to stem the drop, there are tough times ahead. Though, few may pocket hefty money, yet, if you look as a whole, somehow, you have to spend equally higher, which negates any profit that you had probably made.

By Rajiv Sighamony.

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