Finance Experts - What does the foreign exchange rate mean to a normal person?

[m-jeri]

Hi.

This question is to finance people.

Every month I hear big discussions among friends. Regarding the current exchange rate when salary comes in. This gives 59.3 that gives 59.7 Or i will wait for 2 more days and get 10 paisa more per dollar.

Is it really saving? Am I asking coz if more money per dollar means less value for rupee right? we need to spend more money to buy the same things?

Does inflation factor into this?

Can anyone explain?

 

[vyral_143]

Exchange rate in very simple word is how many ₹ we need to spend for getting/buying 1 $/£/€/etc.

Coming to second part of query, yes more money per dollar mean lesser value of rupee. This would help those earning in $. But here in India, this makes things costlier. Like say a phone costing $250 will cost ₹15000 at ₹60/$1. But at ₹62/$1, same will cost ₹15,500. For same amount of petroleum we need to shell out more. Fir same amount of foreign currency loans raised by companies, more interest to be paid. This indirectly causes inflation to rise. However exporters, IT industry gain from such scenarios.

 

[AMG]

Macbook Air is 999$
If $ is at 55 rupees, the laptop costs you 55k
But if its at 65, it costs you 65k.

See the difference it makes?

 

[hotshot05]

Not just IT companies, any person/company who is exporting software/goods/food produce will gain in case of falling rupee.

The rising dollar is supposed to help the farmers but I don't think the extra money reaches them. It is gulped up by the middle men mostly

 

[abhi1984]

Hi.

This question is to finance people.

Every month I hear big discussions among friends. Regarding the current exchange rate when salary comes in. This gives 59.3 that gives 59.7 Or i will wait for 2 more days and get 10 paisa more per dollar.

Is it really saving? Am I asking coz if more money per dollar means less value for rupee right? we need to spend more money to buy the same things?

Does inflation factor into this?

Can anyone explain?

I am bit confused about your query is so packing this one with as much info as I can (not a finance expert though):
1. In forex, the lowest denomination of exchange is called a pip and set to 1/100 of the lowest denominator. So Indian currencies lowest movement is 0.0001 (1/100th of a paise). Now the movement of a 100 pips ie 1 paise is considered a huge movement. Indian rupee is an exotic and partially convertible so it moves 1000-10,000 pips and more pretty easily.

2. Is it really a saving? It depends really - where you want to keep max of your money? USD? INR? If INR then how many dollars do you really exchange at one time? Say 5k USD, 10 paise translates to 500rs.

3. As for inflation - well that is one question which is difficult to explain cause its all interconnected. Short answer is yes it does to an extent. Long not really required for the thread, 2 should suffice.

 

[m-jeri]

Well, my question is kind of stupid.

It is like, I have 2 sources to transfer money to India. Source A lets me transfer for 59INR per USD and Source B lets me transfer for 60INR per USD. Is that 1000rs extra a saving or not?

Sometimes I feel it is. As bigger number in my account. But then considering the inflation and all, thinking that good and services cost more. I don't know.