diamond price dollar inflation

Information about : diamond price dollar inflation ,diamond prices in dollars, diamond industry software solution provider ,falling Rupee impacting Diamond Industry , diamond manufacturers india


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Falling rupee woes

The problem faced by the industry is not only slower demand but also rupee devaluation, which affects imports of rough. In the last one year, the rupee has been devalued by 20% which is seriously affecting manufacturers profit margins. Companies who have imported rough diamonds on credit for 90 or 120 days, keeping payment terms open, have burned their fingers as there was a sudden depreciation in the rupee which has hit profits. Companies who had dollar accounts were better insulated against the rupee volatility and had some relief, but the rest have suffered badly.

The stockpiling of inventory coupled with the rupee devaluation has a severe liquidity crunch in the market. Since the recession of 2008, banks have become very cautious when lending money to the diamond industry as a whole.  Slow demand has caused a stockpiling of polished goods, and consequently, the flow of money is reduced. Some movement in polished sales can really ease the situation.

Speaking about the state of affairs, Nirav Jogani, vice chairman of Lemon Technologies, a diamond industry software solution provider, said, "The tight liquidity across markets is a major short-term issue. The current business scenario is bleak. There is a lot of weakness in sales even at reduced prices. The primary reason is the depreciation of the rupee and a slowdown in retail chain expansion in China, and the Euro zone problems."

Being a financial expert, Jogani also commented on how the rupee devaluation impacts the industry in many ways:
•       Reduced credit lines, as the bank credit is mainly in US dollars
•       Forex losses on unhedged positions
•       Higher prices for local consumers in India are impacting sales
•       Higher overhead costs including hedging costs

Commenting on the prevailing market conditions, Raj Dholakia of DTC sightholding firm Bhavani Gems said, "Demand has been slow since last Diwali. While demand for American goods is decent, there is hardly any market movement in China, India and Europe. The industry is also plagued with other issues such as government red tape, tax legislations, liquidity crunch, excess inventory, macro issues and negative sentiments:'


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