Continuing its free-fall,
the rupee on Thursday weakened by another 23 paise against the dollar to trade at a life-time low of 70.82 on strong month-end demand for the US currency amid sustained foreign fund outflows.
The rupee had recorded a steep fall of 49 paise, to close at record low of 70.59 against the dollar in Wednesday's session.
The domestic currency, in June, breached 69 against a dollar due to high crude oil prices and weak macro fundamentals. Since then the currency has been depreciating with hardly much recovery.
This was rupee's biggest fall against the US dollar since 2016 when the currency had fallen to its all-time low of 68.85. The partially convertible rupee also touched the 68.85 level in 2013, when the country suffered its worst market turmoil since the 1991 balance of payments crisis. Going by what was seen in 2013, the currency fall may have an impact on select areas.
Tourist outflow could decline
The fall in the currency, which has been Asia's worst performing one this year, could adversely affect the tourist outflow as the foreign countries today stand superior to rupee, leaving less scope for the tourists to opt for a foreign visit at this point of time as the cost of spending holidays will be more expensive for Indians.
The fall of the Indian rupee in comparison to the US dollar had adversely affected the tourist outflow to foreign countries in 2013, especially Europe, America and South Asian countries, according to tour operators. In that year, people preferred shorter trips or destinations within India.
“The rupee depreciation has left a significant impact on the outflow of tourists. Even if people are looking for trips to European countries, they are opting for shorter trips in order to curtail the budget,” Nikhil Ganju, the country manager (India) of TripAdvisor had said then.
According to Ganju, various Indian destinations, which are the favourites of foreigners like Kashmir, Ladakh, Darjeeling, Andamans, Kerala, Goa, and Rajasthan, had reemerged as top draws for tourists.
However, the rupee depreciation has its positive side too as India stands as a much cheaper destination for tourists from western countries.
Remittances could grow
Going by 2013 scenario, remittances non-resident Indians could grow by significant amount. The fall in rupee had caused a growth in NRI remittances.
“With rupee depreciating, remittance volumes grew by 12-15% during January to June 2013 as compared to 2012. Remittances have spiked recently with Indian expatriates exploring various avenues, including loans, to send maximum money home, taking advantage of the current situation. This was expected, given the status of the Indian rupee,” Promoth Manghat, vice-president, global operations, UAE Exchange, was quoted by
The times of India. The UAE Exchange accounted for over 10 percent of the total remittances to India, said the TOI report. Students affected
The depreciation in rupee is bound to leave the students worst affected, both, the ones who are studying abroad or are planning to go abroad as the cost of living goes up with them trying to arrange more rupees for $ expenses.
"For education fees of $100,000, if student had to shell out INR 65,00,000 sometime back, they now need to shell out approx INR 68,50,000," Achin Goel, head of wealth management and financial planning, Bonanza Portfolio was quoted by
Business Today. (With inputs from agencies)