Gems and jewelery exporters are set to gain from the depreciation of the rupee against the dollar. The value of exported goods will swell the cash book of these exporters with the same amount of receivables. The rupee closed at 66.65 to the dollar on Monday due to a sell-off in global equity markets. Since August 11, the day China first lowered the value of the yuan, the rupee has fallen 3.60 per cent. The rupee has depreciated 5.52 per cent so far this year.
“While the depreciation is beneficial for Indian exporters, including gems and jewellery exporters, a weak global sentiment will curtail the full benefit,” said Vipul Shah, chairman of the Gems & Jewellery Export Promotion Council (GJEPC).
Data compiled by the GJEPC showed net gems and jewellery exports were $36.2 billion in 2014-15, up four per cent from the previous year. The exports, meanwhile, had fallen 10.6 per cent to $34.99 billion in 2013-14 from $39.14 billion in the previous year.
Jewellery exporters have battled several issues – a downturn in China, unrest in the Middle East, a declining European market, and the depreciating ruble – but demand in the US and the United Arab Emirates kept export prospects aloft. “With volatility in global equity and currency markets, consumers will shy away from buying luxuries, which is not a good sign for India’s exporters,” said Shah. A falling rupee will also make dollar-denominated commodities costlier. “The cost of jewellery will go up for domestic consumers, which might affect local purchases,” said Mehul Choksi, managing director of Gitanjali Gems.