The Rupee Crossed 90 and My Exchange Programme Got Expensive

When we first budgeted for my summer programme, a dollar cost ₹83. This week it crossed ₹90. The programme did not change. The price did.

An 8% increase without anyone raising prices

On December 3, the rupee weakened past 90 per dollar for the first time. My summer programme in Boston costs $6,500. Eighteen months ago that was about ₹5.4 lakh. Today it is about ₹5.9 lakh, an extra ₹50,000 that nobody in Boston asked for. The university did not raise its fee. The rupee simply buys fewer dollars than it used to.

This is what rupee depreciation feels like from a family budget. It does not show up as inflation in the usual sense, because the things we buy in India are not affected immediately. It shows up wherever a price is set in dollars: foreign tuition, international flights, imported phones and laptops, and eventually petrol.

Why the rupee fell

The reasons were stacked together. Indian buyers imported record amounts of gold, which has to be paid for in dollars. Foreign investors sold Indian shares and took their money home. The 50% American tariff hurt exports, which bring dollars in, while the trade deal that might fix it remained unfinished. When more dollars leave the country than arrive, the price of a dollar rises.

The RBI could have spent its reserves to hold the rupee at 89, but it chose not to fight the move hard. A central bank can slow a currency’s fall, but defending one particular number can burn through reserves quickly. The RBI’s approach seems to be to smooth out sudden jumps without trying to set the level.

What my family did

My parents decided to buy some of the dollars now and the rest closer to the date, spreading the risk rather than guessing. If the rupee recovers, they will have paid a little too much for part of it. If it falls further, they will be glad they bought some early. It is the same logic as a SIP, applied to currency.

I used to think of exchange rates as something for traders and exporters. Now I see them as a hidden price tag on every plan that involves the rest of the world. Students planning to study abroad are, without realising it, making a bet on the rupee. It is worth knowing that before the fees are due.