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Fall In Indian Rupee: Something Of Concern To A Layman?

”If I’m going down, I’m taking everybody with me.” One of the funniest and memorable dialogues delivered by the master of sarcasm, Chandler Bing, in the classic television series, F.R.I.E.N.D.S, seems to be appropriate for our current situation in India and the world.

The COVID-19 that emerged from the Chinese city of Wuhan has now forced approximately two-thirds of the world to go under lockdown. It has severely affected the livelihood and health of the people. The unemployment curve is inching towards saturation, the poor class is struggling to get food, skilled individuals like medical workers are dying and the economies are shattering.

For India, in particular, 2020 has not been kind on our economy. At a time when New Delhi was already coping with the lower growth projections, the coronavirus pandemic has further worsened the situation.

Impact of fall in rupee value on economy

According to Klynveld Peat Marwick Goerdeler (KPMG), “the lockdown in India will have a sizeable impact on the economy.”

In fact, the presence of the deadly virus has shockingly brought the economy to a standstill, that even the Indian Rupee hit 76 per US Dollar, for the first time after its introduction, and the fall might only continue.

According to analysts, the Indian Rupee can go to 80 per US Dollar by the end of June. Uncertainty rests as the value of our national currency keeps on fluctuating in the stock market. Trade is getting affected, and possible foreign investments are being withdrawn from our country and various other consequences.

The value of the Indian Rupee per US Dollar, as on April 24 is 76.33.

We Indians can relieve that our ‘green buddy’ is not performing as bad as the other regions. However, it is not something to boast about, because as we know, ‘There is nothing certain, but the uncertain.’

As the Central Government tries its level best to uphold the economy and the Reserve Bank of India (RBI) continuing to revise and then taking up suitable decisions, the bigger image of the Indian economy is what is being looked into.

The drop in the economy severely hits the ordinary people, as we are moving towards an unpredictable future.

How will dip in economy affect commoners?

  1. It can affect the employment opportunities in the country. Many people are jobless now and have given up hope of getting a new job even if the pandemic comes under control. Also, those who are currently employed are not too sure if they can sustain their job for as long.
  2. The individual’s interest in investing in a reputed company will decrease, as he will be more concerned in guarding his ‘only savings.’ Here, the financial management’s basic concept, as followed by companies, ‘Maximization of Shareholder’s Wealth,’ will get violated.
  3. Daily wage earners, like drivers, grocery sellers, and others, will find it difficult to sustain their lives and their families.

As each day progresses, the uncertainty level about the future is rising. Whether the money present with us will be of ANY use, is it worth having all these assets at the moment, will we realize any proceeds on the sale of any such assets?

When the bigger players in the economy are trying to glue the broken economy back into pieces and increase the value of our national currency, we should not ignore the obvious, yet powerful impact that these factors can have on the ordinary people.

The World Health Organization (WHO), had recently stated that the virus is likely to be eradicated anytime soon. It is warning not only for the health sector but also for the global economy to brace itself for the worst.

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