Rupee fall: Travellers, overseas students to feel the pinch

Published: 06/29/2018

Source: http://bit.ly/2N7oyoq

A falling rupee can be a worry for those planning a holiday to the US or students going overseas for higher studies, even if major expenses are taken care of in advance.

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Even if travellers have paid for their air tickets and accommodation, or students have paid their university fees, there are other costs that will surge due to a weaker domestic currency.

According to Karan Anand - head, relationships, Cox & Kings, if a customer has already booked and is travelling immediately, the most important costs are restaurant charges and money for purchases. There could be an increase of 3-5% when the customer is on the road.

For someone who has booked but is travelling a couple of months later, the cost of the package itself would go up because the foreign exchange component is paid closer to the date of travel and the exchange rate is as on the day of the payment. This cost varies from package to package and is typically 40-45% of the total package cost, Anand said.

For those intending to book a foreign holiday, there is a possibility they may down trade. For instance, they may look at a hotel that is slightly away from the city centre. Or instead of a direct flight, they may book a connecting flight as it will be cheaper.

"People usually do not change their destinations. They usually have a contingency plan as it is not a spur-of-the-moment decision. For holidays to the US or Europe, travellers usually have money parked with them since they are used to currency fluctuations,'' Anand added.

For students going overseas, those who have secured a scholarship may not feel much of an impact. For others, if the university of their choice becomes more expensive, they could either take a bigger education loan or help from their family members, said Naveen Chopra, chairman of The Chopras, an overseas education consultant.

"We find students choosing to go to countries where the cost of education itself is cheaper, such as Germany, Spain or Italy," he said.

Students who have paid their course fees for the September term will have to worry about living costs. In some cases, this could be included in their education loan. If not, they can look for opportunities to work. "If they go to countries where 20 hours of work is permitted, they can earn in the local currency,'' Chopra said.

In fact, it is advisable to pay the entire course fees upfront as some universities may offer a discount if you do so.

Making lifestyle changes such as sharing accommodation, cooking your own food, avoiding shopping, cutting down on entertainment costs are some changes one can adapt to cut costs.

The worst-affected will be those who have to remit money urgently, maybe for college fees or a medical emergency, said K Mohan Bhakta, executive director, Weizmann Forex. "A sudden depreciation, like we are seeing now, will hit people who cannot postpone their needs." There isn't much one can do if their need for dollars is a short-term one, say one to two months. But if one has a major event coming up, say paying college fees three times a year, then they can hedge the risk through currency futures and options. "You can hedge 50% of the cost, or even 100% if required. It is open to individuals, too, and with the lot sizes being small, one can do it easily through a brokerage. Most brokerages today offer it," Bhakta added.

CURRENCY TRAVAILS

Even if travellers have paid for their air tickets and accommodation, there are other costs that will surge due to a weaker domestic currency.  

For those intending to book a foreign holiday, there is a possibility they may down trade

Source: http://bit.ly/2N7oyoq

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