BUSINESS DESK: Rupee Drops: Impact on Daily Living Costs
The Indian rupee slipped past the psychologically fraught 90-mark against the US dollar, closing at 90.23 after touching an intraday low of 90.13.
This historic dip, down over 5 percent year-to-date, echoes familiar pains but lands differently in today’s tangled global web.
Families from Mumbai’s bustling markets to Delhi’s quiet suburbs feel the pinch, as once-affordable dreams stretch thinner.
Trade Tensions Take Toll
Stalled talks on a US-India trade pact have cast long shadows, with Washington’s April tariffs hitting Indian goods at up to 50 percent, the steepest levy on any Asian peer.
These barriers crimp exports worth $45 billion, eroding competitiveness and fueling dollar demand.
Add to that a secondary 25 percent penalty tied to India’s Russian oil buys, and the strain multiplies, squeezing manufacturers who once eyed American shelves.
Investor Exodus Accelerates
Foreign portfolio investors, spooked by high valuations and tariff threats, yanked out $17 billion from Indian equities in 2025 alone, converting rupees to dollars in a frantic flight.
This capital drain, peaking at $16.5 billion since August, dwarfs even 2022’s record sell-off, leaving markets jittery and the rupee adrift.
For every share dumped, it’s another vote of no confidence in India’s growth story.
RBI’s Hands-Off Stance
The Reserve Bank of India, armed with $690 billion in forex reserves, has dialed back aggressive defenses, letting market forces nudge the rupee lower to aid exporters amid US duties.
Interventions now focus on curbing wild swings rather than pinning levels, a shift from past crises like 2013’s taper tantrum.
Reserves, though ample for 11 months of imports, dipped $9.3 billion in early August alone to steady the slide.
Import Bills Balloon
With 85 percent of crude oil sourced abroad, alongside heavy reliance on electronics, fertilizers, and edible oils, the rupee’s woes inflate India’s $41.7 billion October trade deficit.
Every dollar fetched now demands more rupees, hiking costs by 12-13 percent on essentials.
Households brace for the ripple: cooking oil up, gadgets pricier, and a current account gap widening to 1.4 percent of GDP.
Fuel and Food Feel the Heat
Petrol and diesel pumps tick higher as oil imports, priced at $81 per barrel, convert to steeper rupee outlays, pushing transport fares and grocery bills skyward.
A five percent depreciation could stoke inflation by 30-35 basis points, per RBI estimates, hitting low-income families hardest, where fuel eats 10 percent of budgets. Vegetables in Kolkata’s carts, already up 40 percent, may climb further.
Dreams Deferred for Students
Overseas education, a rite of passage for middle-class youth, now carries a heavier load: a $50,000 annual fee jumps from Rs.40 lakh at 80 rupees per dollar to Rs.45 lakh today.
That’s an extra Rs.5-10 lakh yearly, forcing some to rethink Ivy League hopes or tap savings deeper.
Dollar-denominated loans sting too, repayment burdens swelling 12-13 percent, turning ambition into quiet anxiety.
Silver Lining for Some
Not all shadows darken: exporters in IT and pharma, billing in dollars, pocket richer rupee hauls, padding margins despite hedging.
Remittances, topping $129 billion in 2024, shine brighter too, with a $500 monthly wire fetching Rs.45,000 instead of 40,000, a lifeline for rural kin funding weddings or wells.
These inflows, up 17 percent globally, cushion the blow for millions.
Lessons from Lopsided Past
Unlike 2022’s dollar surge that battered all currencies, today’s fall unfolds against a steady greenback, spotlighting India’s import-heavy vulnerabilities.
Reserves at $690 billion dwarf 2013 or 2018 lows, buying time for reforms over panic.
Yet stagnant exports, despite a decade’s 35 percent rupee slide, whisper structural woes: over-reliance on oil and gold, not enough homegrown edge.
Path Forward in Peril
As RBI’s December 5 policy looms, eyes fix on rate cuts or bolder swaps to tame volatility without draining the kitty.
For everyday Indians, it’s a call to hedge smarter: fixed deposits for remitters, export-tied funds for savers.
The rupee’s tumble tests resilience, but in its wake, perhaps a sharper, export-savvy economy emerges, if only policymakers seize the moment.