NEW DELHI: A stronger US dollar is not just a forex market issue. It could mean higher costs for Indian companies importing goods or larger budgets for people looking at studying abroad. Also, it means a second look at which companies can deal with higher costs.
On 20-Oct-26, the US dollar was at around ₹95 in the forex market. It has bounced from lower levels earlier in the month. As per Metropolitan Stock Exchange of India, the RBI reference rate was ₹94.7691 on 19-Oct. In India, where businesses use imported oil, machinery and so on, a change in the currency rate can mean a difference in costs.
The rupee matter
A Indian company wanting to buy machinery worth 10,000$. If the dollar rate is 90, then it’ll cost ₹9 lakh. If it is 95 then the cost will be ₹9.5 lakh. The machinery itself might not have got costlier in dollar terms.
To give an example, for businesses which are dealing with large orders and importing materials monthly, this can result in a huge impact. The business can try and absorb this impact, negotiate with the supplier or increase the selling price. Most of the smaller businesses will find it difficult to manage this impact especially when customers are also being cautious with their spending.
The impact can be seen on electronic items, appliances or products with imported components. However, the rise in import costs doesn’t always mean there will be an immediate rise in prices. Companies can have old stock or they may decide to not increase their prices in order to protect the sales.
India’s Economy And The Importance Of Oil
Another major factor is oil, where India is importing crude oil from overseas. Mostly, the payment is being made in dollars. When the international prices of oil are rising, a falling rupee can make the purchase costlier.
According to a report by Financial Express dated 19 October, the import bill of crude oil for India in the first half of FY27 stands at $90.6 billion as compared to $61.9 billion for the same period in the previous year. The volume of import increase is marginal, which means that the rise in prices has been a major factor.
This may affect costs in transportation, manufacturing and delivery. However, this does not necessarily mean that the cost of petrol and diesel will go up if the rupee goes down. The price of fuel globally, taxation and domestic factors determine pricing decisions.
Consider the impact for a family: If a family has to incur a payment in dollars, then it is simpler to understand the impact. So if a student has to pay USD 20000 for the tuition overseas, at Rs.90 per USD, it would mean that you have to pay 18 lakhs. If it were Rs.95, it would become 19 lakhs (before bank charges).
If a family intends to go abroad for a holiday then they would have to budget more for the hotels, shopping, etc. (items paid in foreign currency). These costs will be a function of the exchange rate as of the time of payment. Therefore, it is good to plan well in advance to avoid surprises.
Stock Market impact?
This is one reason investors follow currency news because of its impact on the earnings of the companies.
When there is a reduction in the value of the rupee this could increase the cost of oil (import) or machinery or raw material for the company. If they are unable to pass on the cost to the customers then it could eat into their profit margin. On the other hand, for those who export goods/services (some IT services, pharma, etc.) the conversion of USD income to INR can be beneficial.
Not always. The benefit may be negated by foreign expenses (if any), cost of imports or the currency contracts that an exporter might have.
Foreign investors are also concerned with the value of the rupee. If they sell shares in India and convert the money to dollars then the change in the rupee can affect the amount that they get. However, it’s not the rupee alone that moves the stock market. It is also affected by company performance, global interest rates, the oil price and investor sentiment.
A weaker rupee, in itself, is not a reason to buy or sell shares as an ordinary investor. More important is knowledge of a company’s costs, its overseas revenues, and its financial performance.
What to look out for
What happens next to the rupee will depend on many things, including the oil price, demand for dollars and the flow of foreign investments. Firms that import regularly can look at their costs and payment plans. Families that have overseas expenses can budget for currency fluctuations.
A weaker rupee doesn’t immediately make everything more expensive. It also does not help every exporter. It all depends on the extent of imports and foreign earnings, and the ability to handle the gap.
To Indian households, dollar rate is not just a number in the market. It can affect your overseas education costs, business cost and eventually even your cost for some routine products in life.
