Surat Diamond Association asks diamantaires to start dollar dealings

Surat Diamond Association (SDA) on Thursday appealed to small and medium diamantaires to deal in dollar for purchase and sale of rough and polished diamonds after the rupee slid to an all-time low of Rs 60.72 against dollar.

Around 40 per cent of all transactions in the diamond markets, mainly by the small and medium diamantaires, who don't have access to bank credit facilities, are done in rupee value. The small diamantaires import rough diamonds from Antwerp on 90-120 day credit and pay in rupee value.

The imported goods are processed and sold in the market and the payment is received in the rupee value.

If a small diamantaire had bought $1,000 worth of rough diamonds in April on 90-day credit for Rs 54,000 when the rupee was trading at Rs 54 against the dollar, in June would have to pay Rs 61,000. This is because the rupee now was trading at Rs 61 against the dollar.

The SDA office-bearers said all the transactions, be it in polished or rough diamond buying and selling, should be in dollar value. This will hedge the small and medium diamantaires against the devaluating rupee.

Dinesh Navadia, president, SDA, said, "I do not think that the rupee would recover fast against the dollar. In such circumstances, we have appealed the small and medium diamond manufacturers and traders to go for dollar dealings."

Surat: Surat Diamond Association (SDA) on Thursday appealed to small and medium diamantaires to deal in dollar for purchase and sale of rough and polished diamonds after the rupee slid to an all-time low of Rs 60.72 against dollar.

Around 40 per cent of all transactions in the diamond markets, mainly by the small and medium diamantaires, who don't have access to bank credit facilities, are done in rupee value. The small diamantaires import rough diamonds from Antwerp on 90-120 day credit and pay in rupee value.

The imported goods are processed and sold in the market and the payment is received in the rupee value.

If a small diamantaire had bought $1,000 worth of rough diamonds in April on 90-day credit for Rs 54,000 when the rupee was trading at Rs 54 against the dollar, in June would have to pay Rs 61,000. This is because the rupee now was trading at Rs 61 against the dollar.

The SDA office-bearers said all the transactions, be it in polished or rough diamond buying and selling, should be in dollar value. This will hedge the small and medium diamantaires against the devaluating rupee.

Dinesh Navadia, president, SDA, said, "I do not think that the rupee would recover fast against the dollar. In such circumstances, we have appealed the small and medium diamond manufacturers and traders to go for dollar dealings."