Rupee-led transactions in Dubai's gold market have been adversely impacted after notes ban was announced
Dubai's famous Gold Souq, a prime market for gold, has been witnessing almost a complete absence of visitors from India due to the November 8 currency ban, according to a report by Gulf News. For the single-store operators in the gold market, Prime Minister Narendra Modi's notes ban has brought bad news. A good year sees nearly 15 to 20 per cent of the market's sales in the Indian currency - but that has taken a major hit this year.
"What you are seeing here is a complete mirror image of the crash in gold sales within India since November 8, when demonetisation was announced," said Cyriac Varghese, General Manager of Sky Jewellery.
"Outside of the Gold Souq, shops in areas such as Bur Dubai too have been recording less of Indian visitor buying interest," Mr Varghese said to Gulf News.
When gold prices dip, as it did last week, rupee-led transactions in the Dubai gold market are more than 15-20 per cent, but that is not the scenario this year.
According to retail sources, there has been some compensation in the form of Chinese visitors who have been more active in recent weeks with their gold purchases.
But this is nowhere near the levels of Indian visitors. Chinese prefer the 18-karat as opposed to the 22-karat gold variety, it said.
"A visitor from India would travel to Dubai holding a sizable value in Indian currency, get it exchanged here and then make the conversion to jewellery," said Abdul Salam KP, board member of the Dubai Gold & Jewellery Group.
"With demonetisation, surplus cash is just not available and same is the case with what someone could do with their unaccounted rupees," he said.
Local currency exchange houses are not helping anyone holding the scrapped notes either.
"At present we are not accepting or exchanging any of the discontinued currency notes, taking into consideration the guidelines that need to be adhered to on account of demonetisation," said Antony Jos, Director at Joy Alukkas Group.
In its biggest crackdown on black money, the government announced its currency ban move on November 8, under which high value currencies of Rs 1000 and Rs 500 were banned.
(With inputs from PTI)