The depreciation of the rupee against the dollar increases the cost of education overseas. To counter such situations, banks and experts offer some solutions
Every fall in the rupee against foreign currencies like the dollar makes studying abroad more expensive.
With indications that the Indian currency is likely to slip below Rs 80 to a US dollar, everything from tuition fees, living expenses, insurance and air travel will become dearer. The rupee depreciated by 12 paise to 79.90 against the dollar at the open on September 6.
“Parents who never thought of budgeting costs towards the falling rupee against the US dollar are now forced to shell out more than Rs 2 lakh just for this term,” Amitabh Bhatnagar, head of trade, foreign exchange, diplomatic segment at RBL Bank, told Moneycontrol.
Bhatnagar gave an example: consider $40,000 as the amount for one year of student expenses abroad. In January 2022, the dollar was equivalent to Rs 74.5, which would make $40,000 equivalent to Rs 29.8 lakh. At the rate of Rs 80, the amount would be Rs 32 lakh, which works out to an increase of over Rs 2 lakh in expenses for education overseas.
Add to this the increase in airfares and education abroad becomes that much more expensive, requiring parents to shell out more or even topping up education loans.
arn interest
Bhatnagar recommends setting aside the money meant for paying the fees so that it earns interest–either through fixed deposits or investments–to help offset losses arising out of currency rate fluctuations.
“Fixed interest income earned till the actual transfer is required will save on increased costs on account of exchange rate fluctuations,” he said.
An amount of Rs 32 lakh placed in a fixed deposit at 5 percent for five months will earn Rs 66,000 in interest, thereby helping to reduce additional costs on account of rupee depreciation.
Content Courtesy: https://www.moneycontrol.com/news/business/how-to-manage-currency-fluctuations-while-studying-abroad-9137781.html
No comments