Guwahati, Aug. 30: The relatively new retail foreign exchange trade in the Northeast has been hit hard by the sliding rupee even as inbound tourism has gained from costlier overseas trips.
Full-fledged money changers (FFMC) which had opened shop here just two to five years ago, are the worst affected, with profit margins of some shrinking close to 50 per cent.
“The rupee has depreciated by Rs 12 to Rs 15 over the past two months, following which our profit margins have gone down by 50 per cent. The trend was not such last year, with an intra-day fluctuation of just 10 to 20 paise as against over 200 paise now. Yesterday, the rupee opened at Rs 68.80 and closed at Rs 66.55, thanks to the RBI opening a special dollar disbursing window for oil companies. However, it may again slide tomorrow. So, things are uncertain in the trade,” said Sambhu Roy of Multi Money, an FFMC set up five years ago in the Gauhati Club area.
Apart from the banks and financial institutions authorised by the RBI to sell and buy currency, there are seven full-fledged money changers in the city, which function under a set of guidelines prescribed by the RBI.
“FFMCs like us sell currency at a rate lower than that of banks. But of course, the rate has to be above our average cost. Say for example, if the bank selling rate on a particular day is Rs 69, we sell the currency at Rs 67 if our average cost is lower than the selling price. So, while banks may continue to enjoy client loyalty despite a higher rate, we offer our customers a rebate,” Roy said.
Given the situation, overseas trips have become costlier, reportedly by 25 per cent, while inbound tourism in the region has become healthier.
“A majority of the members of Tour Operators Association of Assam (TOAA) deal only in inbound tourism. Our focus is on inbound tourism as the revenue remains here. So, we are not affected by the rupee slide. On the contrary, with overseas trips getting costlier, we expect a greater inflow of tourists to the region during the season between October and April,” TOAA president Debajit Bora told The Telegraph.
While the general belief (on the rupee volatility) is that it might just be a passing phase, retail foreign exchange traders here are conscious of the risks if the currency slide lingers.
“The trade here is only about 10-12 years old as opposed to about three-and-a-half decades outside. There are risks involved much like what is happening now. So, money changers who had started with a limited capital must be keeping their fingers crossed and hoping for normality to return. Or else, they will run into losses and even close down,” said Dinesh Dhanuka (Forex department) of Pushpak Holidays in the Bora Service area.
As it is, some are playing it safe and keeping limited stocks of currency.
“We are holding on to the current stock and not requisitioning for more, given the ambiguity. But, we expect the apex bank and the government to chip in and stop the rupee from sliding further,” said P. Dey of Cox & Kings.