Rupee has been drowning and waiting for savers. Central bank and RBI have been battling hard to arrest the fall of Rupee, but we know the result. Twin deficits, GDP, CPI Inflation, etc seem to be too technical terms for a common man. He is only concerned on how the hole in his pocket is going to get deeper with all this. Let’s first discuss why the Rupee has been in a dire state and then our responsibilities towards rescuing it.
What is scarce will be higher in demand and what is more will be lesser in demand. It is the law of nature. Now, what has this law got to do with Rupee Versus Dollar relationship? It’s pretty much related. We export and import different goods. Unfortunately, we do not have important reserves such as Crude oil and Gold. Fuel is essential to drive the nation. Though Gold is not quite essential, thanks to our sentiments, we never stop buying gold. When we import these two, we need to pay in dollars. And dollars come to the country through exports, FDI, etc. This is where we are losing. We are exporting less and importing more, thus making dollar scarce (through lesser reserves) than rupee. The result is being seen.
As citizens of the country, we hold few responsibilities towards such issues. Listed below are few steps that we could take to save our Rupee:
1) Stop buying Gold – Seems quite simple and interesting. But, for a country obsessed with gold, it is very difficult to implement. In fact, govt. has taken steps in this regard. They increased the import duty on gold, but it didn’t seem to work much. Gold is on the rise and people could well rush to buy on fear of further rise. This instinct needs to be curbed.
2) Save Fuel – Use more, pay more is not good a strategy. We keep blaming the govt. for rise in fuel prices. Since, we cannot control such things; we better focus on what can be done from our end. Be it Car pooling or using public transport, fuel consumption needs to be reduced. Else, face the wrath of the govt. and oil companies.
3) Postpone Vacations – Not just domestic, but also international consumption has become costlier. Vacation implies airfare, food, accommodation, etc. All these will rise, since we need to pay in foreign currency. Rupee has fallen against many currencies apart from dollar, such as Pound, Ringitt, etc. So, in case you are planning for some of these countries, you better postpone your vacation.
4) Buy Indian Manufactured Goods – If you buy groceries, accessories, clothes, etc from foreign brands, you are only helping the rupee to depreciate. Rather, look for Indian brands which offer these goods, at least till the dust settles down. By doing this, you would also be helping the struggling Indian economy.
5) Stop Speculating in Currency – If you are a trader in currency market, better stay away from currency speculation for a while. Such speculation is one of the reasons behind the Indian Rupee falling.
From investments perspective, you can hold on to your global investments (if any) or look for an international exposure through global funds. Help the economy and rupee through these steps and more, if you can. It is better to start acting now than to say RIP Rupee later.
About the Author:
A.V.Suresh is our in-house Financial Planner and a personal finance enthusiast. He is a Certified Financial Planner (CFP) and also has an MBA in Finance. He can be reached at firstname.lastname@example.org