With the Indian rupee approaching 80 to the US dollar, imports of everything from crude oil to technological goods, education abroad, and foreign vacation would become more expensive, sparking concerns that the inflation situation may deteriorate. The biggest and immediate consequence of a falling rupee is on importers, who will have to pay more for the same amount and price. However, it benefits exporters by providing more rupees in exchange for dollars.
The decline in value of the rupee has nullified some of the benefits accrued to India as a result of the return of global oil and fuel prices to their levels before the Ukraine conflict. To meet its demand for fuels such as diesel, gasoline, and jet fuel, India is 85 percent dependent on oil imported from other countries. After falling to an all-time low of Rs 79.99 to the US dollar on Thursday, the rupee gained 7 paise and was trading at 79.92 in early trade on Friday.
Depreciation will cause inflation, and the prices of devices will fall. Already, due to supply chain shock in China, the costs of electronic components, particularly controllers, have nearly tripled in the last two years, and due to the rapid depreciation of the rupee, the commodity prices of all imported components will climb further.
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