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How does a falling rupee affect you?

Be prepared to pay more if travelling abroad or if your child is studying there.

Tinesh Bhasin Mumbai
Your family and you are flying to the US next week on holiday. Flight tickets and hotel bookings were done in advance. So, why should the rupee depreciation bother you? It should because all other expenses, such as sightseeing, local transfers and food will increase as a result of the fall in the rupee.

Similarly, if your child is studying in a foreign university, don't be surprised if tuition fees increase substantially over last year.

There are also some advantages of a falling rupee. Those working abroad will gain, as the same amount they remit will translate into more rupees.
 
The immediate impact will be on foreign travel and students studying abroad. The indirect impact will be on other expenses, too, as oil prices will go up and this could push up prices of other commodities.

Below is a look at some ways a weaker rupee will impact your life and what you can do about it.

Foreign travel

Europe tours are popular with Indians. Those who have booked and paid earlier, including the forex component, will not feel much of an impact. However, travellers who don't pay the forex component in advance might feel the pinch. Usually, travellers pay the deposit and for flight tickets in rupees, in advance. The forex component, which covers accommodation, meals, sight-seeing and excursions, can be paid later.

One way to avoid last-minute heartburn is to pay for your entire package in advance and not only the rupee component. If booking last-minute, choosing a short-haul holiday to a destination closer to home rather than a long-haul holiday is also a way to save some costs.

Tips to save

- Reduce the number of days from 10 to, say, eight

- Reduce the number of excursions

- Switching to a lower category hotel or staying in a bed and breakfast or home stay

- Cut on shopping rather than sight-seeing, since it is the experience that matters

- Opting for public transport such as trains, subway or buses, rather than renting a car

- While sightseeing, choose days when tourists are allowed to go for free or given discounts. Most monuments abroad have such days

- While shopping, buying from flea markets can work out cheaper than from stores

- Take a decent amount of cash with you, as you might not get good rates while travelling

 - Pre-paid travel cards that allow you to load multiple currencies are a good option. In these cards, the value of the rupee is of the date the money is loaded to the card

Foreign education

Students studying abroad also suffer when the rupee falls. The US, Britain, Canada, Singapore and Australia are popular countries for Indian students. The university will not offer any leeway in tuition fees. Students will have to pay the entire amount. In most cases, you will have to pay before a term starts.

Given the high tuition fees in foreign universities and the cost of living, most students take some loan and pay for the rest by scholarships or taking a part-time job. When the rupee falls, it becomes difficult for the entire family, not only the student. And, not many individuals know how to hedge themselves against currency fluctuations by using derivative products. What you can do is try and pay the entire fee upfront when the exchange rate is low. Most universities give a discount of one or two per cent if you do so. Some lenders also give an option to enhance the loan amount during the course. 

Students going abroad should look for scholarships or part-time jobs like teaching assistantships. Usually, of the total expense of Rs 30-35 lakh required for a foreign university course, students often are able to earn Rs 8-10 lakh through part-time jobs, which pay by the hour.

Tips to save

- Using discount coupons given by universities and accepted at all major stores

- Using cards like the ISIC (a specialised card for students) for travelling, eating out, even shopping at some departmental stores

- Going for free concerts, to movie halls which offer student discounts

- Going to budget pubs, during happy hours, for leisure

- Use special cards that offer discounts to students for eating out and shopping

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First Published: Aug 24 2015 | 7:50 PM IST

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