Since the start of the US-Iran war in late February, the Indian has been under significant pressure. Sample this — on 28 February, the rupee was hovering around ₹91 per dollar, and on 21 May it hit a record low of ₹96 per dollar – within three months of beginning of the US-Iran war. On Monday, the Indian rupee settled at ₹95.23 against the greenback.
The key reasons behind this are rising crude oil prices, FII outflows, and the strengthening of the US dollar. It may be recalled, PM Modi recently urged Indians not to buy gold for a year, avoid overseas travel, and reduce oil and gas consumption in order to protect the rupee and save foreign exchange reserves.
But these are not just macroeconomic factors which stay behind the picture, depreciating rupee’s impact is much beyond it. Here’s a look at how it impcats your daily life, from investments, travel, to your EMIs.
Daily Expenses
Every economy depends heavily on one product – . India fulfils its oil requirements through 85% of imports, and it is traded in dollars. The higher the oil price, the more rupees you pay for the same barrel, thereby eroding the currency value.
Oil plays an important role in running industries, factories, manufacturing raw materials and finished products, and finally reaching it to the end consumers. This means that high oil prices directly affect every household at every level. The price hike in petrol and diesel in India is clearly the effect of this.
Anindya Banerjee, Head of Commodity and Currency Research, Kotak Securities, highlighted that, “the household impact transmits through three channels. First, at the pump — even when the government cushions retail prices through excise adjustments, LPG, CNG, and diesel-linked freight all face upward pressure. Second, in the kitchen — India also imports around 60% of its edible oil (palm, soy, sunflower), all USD-priced, so every drum of cooking oil walks in costlier. Third, through the transport bill — diesel powers India’s trucking, rail freight, and last-mile delivery, so vegetable prices, milk distribution, and e-commerce orders all drift higher. Add imported electronics, smartphones, and ACs to that list.”
Investments
A weaker rupee also adds pressure to your portfolio. Sectors heavily dependent on raw material imports, such as aviation, chemicals, paints, OMCs, and electronics, are the biggest losers of rupee weakening. They need to spend more rupees to buy the same amount of goods in dollar terms.
This directly affects their revenue and profits, thereby impacting stock prices. This means that your investment returns are linked to how the rupee performs in comparison to the dollar.
“Aviation is the sharpest example: per the Federation of Indian Airlines, ATF now accounts for 55–60% of operating costs — up from the historical 30–40% range — and carriers simultaneously face dollar-denominated aircraft lease payments and maintenance contracts. OMCs see under-recoveries widen when retail prices don’t fully reflect crude moves, plus mark-to-market losses on dollar borrowings. Paint makers carry titanium dioxide and crude derivatives at roughly half their raw material cost, while specialty chemicals and consumer electronics face the same bill-of-materials pressure on imported feedstock,” Banerjee noted.
However, Banerjee also highlighted the sectors that enjoy favourable revenue translation. “IT services majors like Infosys, TCS, and Wipro enjoy favourable revenue translation, pharma exporters such as Sun Pharma and Dr Reddy’s see similar benefits, and textile, gems, and jewellery exporters get a competitive boost. Gold ETFs and Sovereign Gold Bonds gain from the dual tailwind of firmer international prices and rupee weakness. The practical takeaway for retail investors is to treat this phase as a rebalancing trigger rather than a panic exit — tilt incrementally toward export-oriented businesses, consider a 5–10% strategic gold allocation, and remember that for long-horizon SIP portfolios, FX cycles tend to mean-revert,” he explained.
Domestic and Abroad Travel
Travelling abroad is definitely getting more expensive due to the rupee depreciation. Expenses such as flight tickets, hotel bookings, shopping, and dining in foreign countries require more rupees to buy the same amount of dollars. For example, a US vacation budget of $5,000 would cost ₹4 lakh at ₹80/USD, but it will go to ₹4.8 lakh at ₹96/USD.
If you are thinking that domestic travel doesn’t get impacted, then it is not true. When companies incur losses due to the rupee fall, they directly increase ticket prices, hotel rates, etc. This means that both domestic and international travel get expensive when the rupee falls.
EMIs and Loans
The rupee’s fall creates a domino effect on the loans and EMIs taken by individuals and businesses. With each rupee falling, the country has to pay more to get the same barrels of oil, which is denominated in dollars.
At the higher crude oil prices, inflation starts rising, and when this happens, the needs to intervene and raise the repo rate. When repo rates rise, banks also increase lending rates, and that pushes up EMIs on floating-rate loans. However, that situation is not a concern in India as of now, but it might arise in the future.
According to Banerjee, “For specific groups, the impact is direct. Education loans for overseas studies see tuition, hostel, and living expenses balloon in rupee terms, often forcing top-ups. Credit card spends in foreign currency carry an FX markup of around 3.5% plus GST at most major banks. Corporates with unhedged External Commercial Borrowings face balance-sheet hits — relevant for retail investors who hold their stocks. The rare gainers are NRI borrowers servicing rupee EMIs from USD income, who effectively pay less in dollar terms.”
What You Should Do Now?
- Review Your Monthly Budget: Imported goods, fuel, and travel-related expenses may become costlier if the rupee falls further. It is best to track your discretionary spending on gadgets, luxury products, and fuel consumption. Cutting unnecessary expenses can help you manage rising inflation better.
- Diversify Your Investments: Do not rely on a single asset class. Consider diversifying your portfolio across equity, gold, fixed income, and international exposure.
- Keep Emergency Fund: A weaker currency can lead to economic uncertainty and higher living costs. Maintaining an emergency fund of at least 6 to 12 months of expenses can provide financial stability during volatile periods.
This shows that everything is interconnected, from geopolitics to markets and daily expenses. A war happening thousands of miles away can impact our daily lives in India. In these times, smart financial planning is the best we can do.
Disclaimer: This is purely for educational/ informational purposes and should not be taken as any sort of investment advice. Always consult a SEBI-registered advisor before making any investment decisions.