Diamond shines as global markets melt

Kolkata: In the past one month, the financial and commodity markets across the globe saw a meltdown to multi-year lows due to Covid-19 outbreak. The diamond contract on ICEX gave a 4 per cent return till the close of the markets on March 17.

“With major export destinations such as Hong Kong, which accounts for 37 per cent of exports, already shut on account of Covid-19 trade curbs, demand has fallen. However, barring a few traders who need liquidity, traders as a whole have been holding inventories, which is keeping prices supported in the physical market,” explained Dinesh Navadia, regional chairman, Gem & Jewellery Export Promotion Council.

Also, there is a co-relation between diamond prices and USD as almost all diamonds come to India for polishing and are exported again. Hence, the gains primarily come due to weakness in rupee against US dollar. Industry executives said diamond futures contract proved to be the best hedge during uncertainties that saw unprecedented selloff. Between February 18 and March 17, crude oil futures slipped 42 per cent, the Sensex 25 per cent, silver 25 per cent and gold 3 per cent.