Rupee Gaining Ground – Time To Rejoice

August 2013 was definitely a month that everyone at the RBI and the government would want to forget. The Indian Rupee tumbled to a record-breaking low against the US dollar. However, September is telling a different story. The Rupee is gaining ground strongly and has already recovered a lot of lost ground. Today, the Rupee stands at 63.13/dollar, compared to an all-time low of 68.56, just 10 days ago.

It seems RBI reforms and stronger interest rates have done the job. The Indian government, particularly the Finance Minister, was not too perturbed by the toppling Rupee. And now we know why he wasn’t too hassled by the whole incident. Industry experts do feel that the Rupee is going to gain further and end its climb at Rs 57-58/dollar. But some optimists do believe it may gain a bit more.

So what does this spell for the Indian economy?
To start with, the pulse of the economy, the fuel prices, which had a sword up its neck, would not see an increase. This is, by far, the most important factor that everyone was fearful of. After all, most goods, either directly or indirectly, see a price rise, if the fuel prices go up. Moreover, importers are breathing a sigh of relief as the tumbling Rupee finally came to a halt and it is now strongly climbing back up, encouraging imports. Oversees investments might get a push as well.

And what does this do for the average Indian?

Holidays again become cheaper. Although many had junked their plans of going abroad this season, with the rupee gradually coming back to its original valuation, many families can now look forward to meeting their relatives on foreign shores. Cheaper international tickets and hotel stays also become a reality.

Imported food items become cheap again. Compared to 2 weeks ago, the food items brought from other countries will go back to their pre-rupee-tumble costs. Households can again invest in cereals, seasonal international fruits and commodities like olive oil.

Imported cars don’t get costlier. Indians love their cars but if those are out of reach, they would have no choice but to look at other means. There might be no price rise or only a negligible price increase in the automobile segment, and we should see some serious buying this festive season.

International education will be back on track. The biggest concern of parents whose children are studying abroad was that they would need to pay a lot more for overseas education. Thankfully, they would not feel the pinch much as the lowered rupee rate will be a relief for them and their children. Children looking to study abroad can again fill their forms and look at universities in far-off lands.

Electronics will again be within reach. When the rupee tumbled, most gadgets and electronic devices saw a steep price rise. As much as 10% hike was seen on the price tags of digital goods such as DSLR cameras. With the gaining rupee, the prices will again stabilise and come back to normal. With the merry season approaching, many flock to the electronics store to buy the latest in technology. With the rupee coming down again, people can purchase their favourite brand of phone or television without burning a big hole in their pocket.