Dipping INR, the advantage to exporters in India

 

Drop in Rupee adds to gold’s role of value for Indian buyers 

Upon falling of India’s rupee, Colin Shah, MD, Kama Jewelry submit on the impact of INR hitting low and its impact on Indian gems & jewellery exports. He said, the depreciation of the Rupee over the long term is not an abrupt situation for the gold and jewellery sector. 

The value of the Rupee moved from 30 per dollar in the early 1990s, progressing past 60 to 90+ in 2013. But the fall from around 60 to over 90 in the last decade is an abrupt turn of events.  

Since gold is dollar-indexed, the fall of the Rupee increases the landed costs, reduces the profitability, and increases the working capital requirements. 

This downtick in the peak of holiday season in the international markets comes a mild blow to Indian gems & jewellery exports. Contrastingly in the domestic market, this is further adding to gold’s role of value for Indian consumers.  

The Indian exporters will enjoy some kind of advantage due to a fall in the rupee, whereas Indian manufacturers will face increased costs. The current challenge for this industry is efficiency, discipline in hedging, and value-added designs to meet the requirements of a situation in which currency depreciation is not cyclical, but secular.