DTC Cut Rough Prices But Indian Dealers Say Won't Help

Indian diamond industry caught between a rock and a hard place by falling rupee and rising rough diamond prices.

The Diamond Trading Company (DTC) reduced prices of rough goods by between 1.5 and 2 percent in different categories of rough diamond boxes at its most recent sight at the end last month, the Times of India reported.

Nonetheless, most Indian DTC sightholders believe that the small reduction in rough diamond prices will be of little benefit to the Indian diamond industry since it has been far outweighed by the decline of the rupee against the dollar in recent months which makes imports expensive.

The rupee has fallen by around 20 percent against the dollar since May, and fell to a record 68 to the dollar last week before gaining some ground after India's central bank intervened in foreign exchange markets.

In addition, rough diamond prices have jumped by 10-15 percent since the start of this year while polished diamond prices have stood still or declined.

A DTC sightholder cited by the Times of India said, "A two percent reduction in rough diamond prices is not going to help the Indian diamantaires as the rupee has weakened by almost 19 percent in the past two months. There is no profitability left for the diamantaires."

Another diamond trader said, "We were buying rough diamonds at 54 rupees per dollar in May and today we have to pay 67 rupees for the same goods. Now, the two percent reduction [by the DTC] is not going to help the industry at large."