High inflation alert as rupees nosedives

BHUBANESWAR: Experts have warned of high inflation after the rupee fell to its lowest level against the dollar on Wednesday.
Depreciation of the rupee will affect the spending capacity of people while foreign travel, studies abroad and loans may get costlier, experts cautioned. The rupee dropped to an all-time low and crossed the benchmark of 80 per US dollar.
The exprts said imports will be costelier and trade deficit will be high leading to high inflation. Since the price of various imported raw materials will increase, it will be reflected on the rise of prices of the end product. The middle class and the poor will be hit the most, said financial expert AK Sabat.
Sabat said when the whole world is facing recession and passing through a economic slowdown, India cannot be an exception. “Some people are saying the rupee may fall to 85 per dollar in coming days. The foreign exchange reserve of India is not in a good position and is witnessing a steady fall. It is difficult to predict what is in store. I am not pessimistic but pessimism engulfs me when I see all these happening around us,” he said.
Experts also pointed out that the depreciation of the rupee will lead to increase in the prices of fertilisers, edible oil, gems and jewellery, petrol and diesel, chemicals, electronic goods, automobiles and machinery items.
“Once inflation goes up, the Reserve Bank of India (RBI) will again increase the repo rate leading to a rise in interest of loans, which will further add to the financial burden of the middle class,” said Trinath Lenka, a financial adviser.