Effect Of A Weak Rupee
1.The Governments for that matter,ANY Rupee-term Debt becomes cheaper.
Wealth is transferred to the Government from the citizens' savings like the many Post Office and Bank accounts,Pensions,PPF etc,and to the exporters,Borrowers in Rupee terms,like Banks.So these entities benefit.The recent 20% Rupee fall is equivalent to an additional 30% tax on the Citizens.
2,All Foreign Currency Loans become costlier.For example India's Debt of $ 104 Billion from the World bank entails very huge loss as these loans were taken MOSTLY when the Rupee was far stronger at 45 to the $ and below!Interest and principal repayment entails very huge loss for India.
3.Imports become costlier and exports will subsidize the Foreign customers at the cost of Indians.
4.Bonds become weaker.
5.The Rich-Poor gap widens.
Will be updated....
