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A weaker in rupee makes the US dollar expensive. It means that as you plan foreign trip, you will need more rupees to buy a dollar as the domestic currency depreciates. Here’s how to protect yourself from currency fluctuations:
If you are planning to visit abroad, a forex card is one of the best tools to manage these expenses amid a depreciating rupee.
The Indian rupee has become weaker in the past few months amid strength in the US dollar and a continuous FPI outflow from domestic equities. Though the domestic currency has recovered in the past few weeks from its all-time low of 87.95, it declined sharply on Tuesday by 47 paise to 87.19 against the US dollar. Any weakening in the rupee against the dollar adversely affects your foreign trip budget. Know how and how to cushion yourself from the currency fluctuation:
What Is The Rupee-Dollar Trend, Why Is It Falling?
The Indian rupee started falling during September-October when foreign portfolio investors (FPIs) began selling Indian stocks. The domestic current hit the 84 mark for the first time in history on October 11, 2024. After over two months, the current hit the 85 mark to its all-time low of 85.07 a dollar on December 19. It then fell to the 86 level for the first time on January 10, a rupee fall within less than a month.
It cracked another rupee from its value on February 3, when it hit the 87 mark. Within a week, the local currency its almost the 88 mark to touch 87.95 to a dollar on February 10, before recovering its sharply after the RBI intervention and a dollar weakening to currently trade at 87.19.
It recovered to 86.50 on February 21, before weaking to 87.19 on February 25.
Why Is The Rupee Falling Against US Dollar?
The Indian rupee has been falling against the US dollar mainly on account of a strength in dollar, which happened after Donald Trump won the US Presidential elections. The dollar gained value after Trump’s victory in anticipation that the new US president’s policies will likely fuel inflation in the US due to tariffs and extra expenditures.
The FPI outflows from Indian market due to high valuations also fuelled the decline in the rupee against the dollar.
How Can It Impact Your Foreign Trip Budget?
A weaker rupee makes the US dollar expensive. It means that as you plan foreign trip, you will need more rupees to buy a dollar as the domestic currency depreciates. For example, in early October 2024, you would have required around Rs 83.5 to buy a dollar. Now, after the continuous decline in the rupee in the past few months, a dollar now requires over 87 rupee.
This makes foreign trips expensive for Indians who need to convert the rupees into dollars for expenses abroad.
How To Cushion Yourself From Rupee Fall?
For anyone planning to travel or make purchases abroad, a forex card is one of the best tools to manage these expenses amid a depreciating rupee. A forex card comes in handy as it cushions you from currency fluctuations. Understanding how to manage foreign currency expenses efficiently is crucial.
Forex cards are beneficial for international travellers, students, business travellers, and even those making online purchases from foreign retailers.
Banks like ICICI Bank, HDFC Bank, and SBI, offer forex cards to its clients.
How Does Forex Card Help You?
Lock-In Exchange Rate: When you load money onto a forex card, you lock in the exchange rate at that moment. This means if the rupee continues to decline, you are shielded from further depreciation.
Lower Transaction Fees: Using your Indian credit or debit card abroad often results in high transaction fees due to additional currency conversion charges. Forex cards, however, are designed for international use, meaning they don’t have these extra charges.
Multi-Currency Options: Many forex cards come with the option to hold multiple currencies. For example, a single card can carry balances in USD, EUR, GBP, and several other currencies, allowing seamless travel across countries without the need to worry about conversion rates for each new country. This is especially helpful for business travellers or those on multi-destination vacations.
So, if you’re planning an overseas trip or are a student preparing to study abroad, a forex card might be beneficial to save on costs and avoid exchange rate shocks.
