Dubai: With the falling Indian rupee, sales of gold in the UAE have been stable, according to retailers.
“I believe the sales are stable. We have not seen any effect,” Firoz Merchant, chairman and founder of Pure Gold Jewellers told Gulf News.
The Indian rupee has dropped around 20 per cent against the US dollar since January.
The Indian government has taken steps to curb imports and raise capital inflows to support the declining rupee, which includes increasing the import duty of gold from four per cent to 10 per cent.
Those carrying gold worth more than Rs100,000 to India for commercial purposes will have to pay the duty, said Pradeep Unni, Senior Relationship Manager at Dubai-based commodities trading firm Richcomm Global.
The Indian government has also banned the import of gold coins and medallions. The reason behind the ban is to “reduce these items [because] the government have to shell out gold dollars to buy oil”, Unni said.
It also wants to reduce dollar demand by reducing the import of gold coins, he added. These steps, however, have not stopped people coming from India to the UAE to buy gold, said Unni.
“It is cheaper for any Indian going to India to buy gold here than to buy it there. If you add the duty, VAT (value added tax) and service tax, there’s a huge difference in prices. They will still buy here. That’s not going to affect sales ,” he said, adding that he hasn’t seen any effect on gold sales in the last two to three weeks.
Gold retailer Joyalukkas has seen stable sales as well. “We have not seen a drop in sales due to the fall in the rupee rate. I feel consumers very strongly believe in the long term investment opportunity of gold hence they stick to this rather than only speculating on the short term fall of the rupee,” John Paul Joy Alukkas, executive director of Joyalukkas Group, told Gulf News in an emailed statement.
“There is as much or more demand for jewellery at our showrooms and this would mean [consumers] are not really concerned about [the government’s policy on gold],” he added.
Meanwhile, demand for gold imported from India has been reduced, according to Unni. “That will affect UAE traders focusing on Indian consumers and exports,” he said.
In April this year, 142 tonnes of gold was imported in India, which dropped to less than 40 tonnes in July, Unni said.