Alarming fall of Indian rupee against US dollar: Know how Indians expect to be hit by decline, as per survey

Over the last few years, the Indian rupee has fallen steeply against the United States (US) dollar, worrying traders and investors across the country. The Indian rupee last week crossed its all-time low exchange rate of 80 against the US dollar. This means that the dollar to rupee rate has moved from 1:38 in July 2007 to beyond 1:80 in July 2022 in relative economic terms.

Given the massive rupee depreciation, LocalCircles via its latest survey has attempted to understand the pulse of citizens on how they view India’s performance in relative economic terms in the last 15 years and whether they have concerns about the weakening rupee’s impact on their lives.

The survey received over 34,000 responses from citizens located in over 328 districts of the country of which 65% of respondents were men while 35% respondents were women; 43% of respondents were from tier 1, 34% from tier 2, and 23% respondents were from tier 3, 4 and rural districts.

According to the results of the LocalCircles survey, 1 in 2 Indians surveyed believes that India in relative economic terms has performed poorly given the massive rupee depreciation from INR 38 per USD in 2007 to INR 80 per USD in 2022. This question in the survey received 11,207 responses.

Government’s steps to slow down rupee’s decline against US dollar

The Reserve Bank of India and the government have over the last few weeks taken steps to boost the foreign exchange reserves by taking steps to improve remittances to India. The fifth round of the remittances survey by RBI for 2020-21 finds that the share of Gulf countries in total remittances has declined, reflecting the slower pace of migration and presence of Indian Diaspora in informal sectors which was hit the most during the pandemic period.

Amidst ongoing rupee weakness, the RBI has announced steps to reduce demand for foreign exchange by promoting rupee settlement of trade – both exports and imports – flows. To support the increasing interest of the global trading community in the Indian rupee, it has been decided to put in place an additional arrangement for invoicing, payment, and settlement of exports/imports in the rupee after prior approval.

Indians concerned over falling rupee

Despite several steps announced by the RBI, the majority of the Indians, according to the survey, believed that they will be impacted severely due to the fall of the Indian rupee against the US dollar.

As per the LocalCircles survey, as many as 76% of 10,778 respondents expressed concern that they and their families will be able to afford less in the next five years as higher import costs will get reflected in products they buy right from petrol and diesel to consumer goods and services and even overseas education, which would impact an increasing number of students seeking to pursue higher education.

Talking about which sector will impact their lives the most, over 50 percent of the participants in the survey pointed to rising costs of petrol, diesel, and LPG, used as cooking fuel in most households in the country.

An equal percentage of respondents feared that a weakening rupee would adversely impact them and their families as food, medicines, and overall healthcare costs go up.

In summary, the findings of the LocalCircles survey indicate that the massive rupee depreciation, which last week crossed INR 80.00 for a US Dollar, is causing concerns on many fronts as it is expected to impact the prices of several important goods and services in the coming years. For 1 in 2 Indians surveyed, the weakening of the rupee against the dollar from 38 to 80 in the last 15 years is a reflection that in relative terms, the Indian economy has performed poorly.

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