How Will I Pose Like Shah Rukh in Switzerland if the Rupee Continues Falling?

Money Matters

How Will I Pose Like Shah Rukh in Switzerland if the Rupee Continues Falling?

Illustration: Akshita Monga/Arré

I

realise I am turning into my parents. It has been nearly four months now since I started pulling aside people born in the ’90s and telling them, as I lean on my walking stick, that when I was their age, it was ₹50 to the dollar. Then I give them four annas to buy themselves some sweets as I go about my day.

I’m not sure if the lay person really bothers to understand exchange rates, because it doesn’t quite play into our daily lives in any concrete way. In fact, there are possibly only two, non-RBI affiliated groups of people on whom exchange rates have any immediate impact.

The first are those doing import-export. That’s right. It’s a real thing. You think import-export is just something people say to cover up that they’re in the mafia? You’re not wrong. But also, yes, import-export is a real thing and having to pay ₹70 for something that cost ₹60 a few months back can be a real bummer. On the flipside, you also get paid ₹70 for something you could only sell for ₹60 earlier.

Basically, if you’re an importer, things have been bad. If you’re an exporter, things have been good. If you’re in the mafia, you really shouldn’t care.

Then there are people that need foreign currency. Spare a thought for the Dad who sends his daughter to the US to study (#BetiPadhao). His heart monitor is probably synced to the Bloomberg currency terminal and this past year hasn’t been kind.

India has such a gold fixation that it’s a wonder that Indian housewives have not planned an Ocean’s Eight type heist on RBI reserves (please Bollywood, don’t make this).

Also spare a thought for the boy whose life-long dream has been to stand on the snowy inclines of Switzerland and stretch his arms wide open, Shah Rukh-style (after paying the customary licence fee to Yash Raj Films, of course). He now needs to be satisfied with a trip to Manali, after which he will photoshop the Matterhorn into a picture of said pose, taken on some basic snowy incline (after paying the customary licence fee to Yash Raj Films, of course).

But even though the exchange rate is ignored by most, the truth is that it is constantly playing a part in our lives. It sneakily finds a way to chip away at our wallets. An importer eventually needs to sell his goods within India, meaning that the over-priced bag of Maltesers will now be even more overpriced. And even if you don’t like Maltesers (Why wouldn’t you, though? They’re chocolate-coated balls of Horlicks. A flawless confectionery treat if ever there was one), there’s a whole range of things India imports that will just keep getting more expensive. Think iPhones, or those weird Chinese apples that have a polystyrene net around them… or maybe petrol?

That’s right. Every time you scoff at the exchange rate for being inconsequential to your life, remember that we import all our oil and now have one of the highest fuel prices anywhere in the world. Why is this happening?

The why of exchange rates is rather simple. Remember that demand and supply class you once sat through, before deciding computers was a better option than economics? Turns out our exchange rate continues to spiral downwards because we simply demand more from the outside world than the outside world demands from us. We demand foreign currency to buy imported goods and services and offer our now-super-ugly-after-demonetisation currency in return. And like self-esteem, currency devalues the more you put out without anyone really reciprocating.

Basically, if you’re an importer, things have been bad. If you’re an exporter, things have been good. If you’re in the mafia, you really shouldn’t care.

As for what we keep buying that makes our current account deficit look more and more like Kingfisher Airline’s balance sheet? Think of the stuff running your Mom’s car and the stuff in your father’s jewellery box. Apart from oil – which we do not produce and hence need to keep buying to maintain the air quality in Delhi, we also have an insatiable appetite for gold.

So, the next Akshaya Tritiya, think of how your irrational attachment to gold for auspicious reasons is messing up life for someone that just wants a bag of Maltesers at a decent price.

India has such a gold fixation that it’s a wonder that Indian housewives have not planned an Ocean’s Eight type heist on RBI reserves (please Bollywood, don’t make this). And like oil, we don’t make a single nugget within India.

The fact remains that if we continue to guzzle oil and dazzle in gold, the outflow will never match the inflow. “Is there any way to remedy this?”, you ask, slumped over and defeated, like a boy who just consumed his last Malteser.

Take solace in the fact that at least we buy gold, which holds its value over time. So, when the revolution comes – and it may well be around the corner – at least we’ll have bling on our side.

At the end of the day, the only way to ensure the rupee appreciates in value over the long term is for India to build competitive advantages in areas relative to the rest of the world. That means developing products or services whose demand outweighs our demand for oil, gold, and Maltesers. This not only takes time, but a lot of focussed investment in new technologies. Think of how much the US benefits from selling iPhones, or the Swiss benefit from selling chocolates, cheese, and Roger Federer’s awesomeness. India does have some stuff – like IT services, sporting goods, mangoes and basmati rice – but it doesn’t weigh off the stuff we buy.

So, make no mistake – despite the slight uptick in recent days, the future looks bleak for the Indian Rupee. Take solace in the fact that at least we buy gold, which holds its value over time. So, when the revolution comes – and it may well be around the corner – at least we’ll have bling on our side. And that… that’s not nothing.

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