₹92 per Dollar Isn’t Just a Number: Why a Weak Currency Makes Life Costlier in India

A weak rupee does not stay in currency markets. It quietly shows up in household budgets. When the rupee moves toward levels like 90 or beyond against the dollar, India starts paying more for fuel, food, education, healthcare, travel, and essential imports. Life does not feel expensive overnight. It feels heavier month after month.

India does not need a currency crisis for this to become dangerous. With high import dependence and dollar-linked costs across the economy, a falling rupee pushes financial stress into the future, especially for households and businesses with limited buffers. That is why a number like 92 per dollar is not just a market headline. It is an early warning. India is structurally import-dependent.

• Crude oil: ~85% of India’s oil demand is imported
  
• Edible oils: ~60% imported
  
• Electronics & machinery: heavy dependence on imported components
  
• Fertilisers: significant imports of urea, phosphates, potash

A 10% rupee depreciation mechanically raises the rupee cost of these imports by roughly the same margin even if global prices remain unchanged. India’s annual merchandise imports exceed $700 billion—which means every ₹1 depreciation materially raises the import bill.

This feeds directly into fuel prices, fertiliser subsidies, manufacturing costs, and eventually consumer prices. India’s CPI basket includes several categories that are indirectly dollar-linked:

• Transport & fuel
  
• Manufactured goods
  
• Medicines and medical equipment
  

RBI research shows that currency depreciation has a pass-through effect on inflation, especially via fuel and tradable goods, even when headline CPI is under control.

This is why the Reserve Bank of India repeatedly flags exchange-rate volatility as a risk in its Monetary Policy Committee statements.

The effect is not immediate, but persistent: prices rise slowly, wages don’t adjust at the same speed, and purchasing power erodes quietly. India runs a current account deficit, meaning it relies on foreign capital inflows to balance trade.
According to RBI Balance of Payments data:

• Portfolio flows (FPI) are highly sensitive to currency risk
  
• Periods of rupee weakness have coincided with equity and bond outflowsf
  
• Outflows push bond yields up, raising borrowing costs
  

Even without a crisis, a weaker rupee can:

• Tighten domestic liquidity
  
• Increase corporate borrowing costs
  
• Delay private investment
  

This matters because investment-not consumption, drives long-term job creation. India’s external debt stands at ~$620–630 billion (RBI)
A significant portion is:

• Dollar-denominated corporate borrowing
  
• External commercial borrowings (ECBs)
  
• NRI deposits
  

When the rupee weakens:

• Debt servicing costs rise instantly in rupee terms
  
• Balance sheets worsen without new borrowing
  
  

Sectors like aviation, infrastructure, power, and telecom—already capital-intensive—become more financially fragile. Companies respond by cutting capex, passing costs to consumers, or slowing hiring.

Currency depreciation thus translates into real economic stress, not accounting noise. India sends over $25–30 billion annually on:

• Overseas education
  
• Travel and tourism
  
• Subscriptions, software, and services

A move from ₹82 to ₹92 per dollar raises these costs by 12%+ instantly, with no change in quality or service. This disproportionately affects the middle class, where such spending is planned tightly.

What was affordable through saving becomes postponed—or abandoned. A weaker rupee helps exporters in theory. In practice:

• Many exporters import raw materials or components
  
• Cost advantages are diluted
  
• Global demand conditions matter more than currency
  

RBI and trade data show that export growth does not automatically accelerate with depreciation, especially when global growth is weak.

Export benefits take time. Import-led inflation and household cost pressures arrive much faster. A weaker rupee raises:

• Oil import cost
  
• Fertiliser subsidy bills
  
• External debt servicing
  

India’s oil import bill alone exceeds $150 billion annually in normal years. Even modest currency weakness increases fiscal pressure, limiting room for:

• Tax cuts
  
• Welfare expansion
  
• Infrastructure spending
  

For citizens, this shows up as tighter budgets and slower policy relief.