Rupee rolled once again against dollar, know what will be its effect on you

The rupee on Thursday declined by 21 paise to 79.73 (tentative) per dollar in the interbank foreign exchange market due to a weak trend in the domestic stock market and strengthening of the dollar.  The rupee is open at 79.53 against the dollar in the interbank foreign exchange market.  After revolving in the range of 79.44 and 79.73 in the day's trading, it finally closed at 79.73 with a fall of 21 paise against the dollar.  The rupee had closed at 79.52 per dollar in the previous trading session.

Meanwhile, the dollar index, which reflects the position of the US dollar against the six major currencies, fell 0.09 per cent to 109.56.  Global oil standard Brent crude futures were down 0.96 per cent at $ 93.20 per barrel.  The 30-share Sensex of BSE closed at 59,934.01, down 412.96 points.

Foreign Institutional Investors (FIIs) sold shares worth a net Rs 1,397.51 crore on Wednesday, according to provisional stock market data.

What will be the effect on you?

 The weakening of the rupee will reduce the impact of any shortfall in the commodity imported from the international market.  In such a situation, it will take more time to get the benefit of the fall in crude oil because the depreciation of rupee in the midst of fall in prices will increase the import bill and this will continue to burden the exchequer.  A good situation for India will be when the commodity prices fall in the international market, while the rupee also remains strong.  If this does not happen, then India will not get the full benefit of reduction in commodity prices.

The biggest impact of the depreciation of the rupee will be on imported goods or such goods in which imported components are used.  The most demanded item in this category is mobile phone.  India Cellular and Electronics Association (ICEA) President Pankaj Mohindru said a one per cent depreciation in the rupee impacts the mobile phone supply chain by 0.6 percent and is due to imported components.  A fall of five per cent impacts the overall profit by three per cent.  In this case the prices will increase.