Study Abroad Programs and the Rupee
As the rupee is weak, imports of telecommunications equipment will become more expensive for Indian consumers. This weakening of the rupee will increase the pressure on the government’s exchequer. This will affect both the Importers and the Exporters. Meanwhile, the decline of the rupee will hit the Students studying abroad.
The weaker the rupee, the more expensive imports for India will be. As much as 80% of India’s crude oil comes from abroad, the more vulnerable the rupee is, the more expensive the petroleum products and US dollar will be. Freight and transportation will also become more expensive. The weaker rupee will affect everything from importers to exporters and even Indian students who study abroad.
The weak rupee also benefits big pharma companies in the US and Europe. Due to the weak rupee, they can expect to boost their profit margins in the coming quarter. However, the US dollar’s strength has dragged the rupee’s value. It has fallen 5% since the start of the year and is now back at a high level.
Exporters will benefit from the weakness in the rupee.
The recent fall in the rupee has benefited many sectors. For example, textile and apparel companies are now seeing a rise in demand for their exports since the rupee is more expensive than competing currencies. And while the decline in the rupee has hurt the economy overall, it is a boon for exporters in several industries. The rupee depreciation will benefit the exporters of these products as shipping costs have already gone through the roof.
A weak rupee will boost the economy, especially in sectors where imports are minimal. For example, exporters of carpets and handicrafts expect the rupee depreciation to increase revenue by up to 10%. However, other sectors dependent on imports are unlikely to benefit from the rupee depreciation. For the time being, the rupee’s fall will positively impact the economy, including industries that depend heavily on imported inputs.
One key reason for a weak rupee is that it makes imported products cheaper, while exports cost less in dollar terms. That is particularly helpful for export-intensive sectors, such as agriculture, manufacturing, and retail. Consumers in India are price-sensitive, and when prices rise for imported goods, people will shift to cheaper domestic goods. And since they will save money, a weak rupee is also a boon for manufacturers, retailers, and farmers.
The weak rupee has boosted India’s exports in recent months, but the RBI is unwilling to tolerate a stronger Rupee. So the Rupee may stay on a negative note against the Yuan and dollar for the foreseeable future. But as a currency, the rupee will remain volatile for the foreseeable future. There is no reason to believe that this will end soon. But it may be an excellent time to start exporting goods to China.
A weak rupee also means that exporters will benefit from lower international prices. However, a weak rupee will hurt commodity prices and depress commodities prices. Moreover, a weak rupee will prevent India from reaping the benefits of falling commodity prices, a boon for its exporters. And India needs lower commodities prices to grow, and a weak rupee makes it challenging to accomplish this goal.
With a weak rupee, the textile and clothing industries are expected to benefit. Indian yarn exports to China rose by 20-24%. The weak yuan also hurt Chinese exports. The weak rupee helped Indian exporters take advantage of the depreciation in the currency. That gave them an edge over their competitors. And it will also cushion the garment producers against higher raw material prices.
Students studying abroad will be affected by the weak rupee.
As the rupee is tied to oil, the rise in fuel price will impact daily consumption items like petrol and diesel. The weak rupee will lead to an increase in the prices of agricultural products and manufactured goods. Students studying abroad will also have to pay higher prices for these essential commodities. The weak rupee will also affect the cost of study abroad programs as students will have to spend more for every dollar. A weak rupee will involve the study abroad expenses of thousands of Indian students.
In recent weeks, the rupee’s value against the dollar plummeted an unbelievable 18 percent compared to its value a year ago. This decline significantly impacts Indians studying abroad and in the US. The rupee depreciation has caused the cost of overseas education to soar, especially for students who are supposed to start paying their fees in September/October.
Because of this, many students are deciding to pay their tuition in one go, despite the rupee’s decline. However, the weak rupee has not affected student travel to the US so far, so students who are already enrolled in an overseas education program should not delay their plans. Moreover, students with already sanctioned loans may have to seek a top-up loan. The weak rupee has also affected parents, who will have to dig deeper to cover the costs of their child’s education abroad.
The strong dollar will also affect the cost of educational loans for students studying abroad. With the weak rupee, India’s worth of education loans will increase by five percent. As a result, sending a child overseas will be more expensive for the parents. However, the weak rupee will help those students who have already paid their education fees and are repaying their loans in rupees.
While the falling rupee may be welcome news for some segments of the Indian population, the rupee’s depreciation can be highly detrimental to students planning to study abroad. The weak rupee has already caused an increase in tuition fees for students applying for the autumn intake. This means students will need to increase their budget by Rs 4,000. Therefore, students are advised to make an early decision about their study abroad plans.
Inflation in the world economy is 3.3%, and India’s inflation rate is expected to reach three percent by 2020. The weak rupee will impact the study abroad sector the most. Hence, the study abroad sector in India is already feeling the tremors of a depreciating rupee. The weak rupee will also affect tourism in India. Higher travel and hotel charges will result in increased spending.