Indians Travelling Home Skip Shopping, Repatriate Money

By Shahid Altaf / Muscat

As the Indian rupee slumps to new lows and exchange rates (with the Omani rial) scale new heights, most Indians travelling home now are skipping their regular shopping in Oman, report storeowners in Muscat. "We are running at a loss. Compared to last year, there is a big decline in footfall in our shops. People are not coming to buy goods like they used to do. They all are running to exchange houses to send money. Nobody is coming to our shops for purchases," Syed Manoos Ali, a shopkeeper who sells electronics and cosmetics in Ruwi, told INN.
The Indian rupee's fall is approaching a record low on sustained US dollar-demand from importers, forcing the Reserve Bank of India (RBI) to intervene to support the currency. The rupee fell 1.4 per cent for the week, and its nine-week losing streak is the longest since the last one ended on June 3, 2012. Today, the exchange rate for one Omani Riyal was 160.10 Indian Rupees (INR). 

"Middle-class Indians used to come for a shopping spree before they travel to India. Now, as the exchange rate of Indian rupees is touching new heights, they prefer to send money rather than spending it here," an employee at a shopping market said.

"Even though, the Indian rupee's value is falling, the Indian consumer product market has not started to feel the impact. So, the prices of electronic gadgets are almost the same, when compared to this region. This has prompted people to prefer to buy products only in India," the employee added.

The RBI was cited selling dollars via state-run banks after the rupee fell to the day's low of 60.59, not far from its all time low of 60.76 reached on June 26. Analysts feel that the government and the central bank will be forced to unveil new steps if the rupee does not stop its slide.

Even the central bank's intervention has not been strong during the current bout of the rupee's weakness. Analysts expect US job growth to have slowed in June, but not enough to shift the Federal Reserve away from expectations that it will begin scaling back its massive monetary stimulus later this year.

Markets are also awaiting potential measures from the government to open more sectors for foreign investment in a bid to narrow a record high current account deficit that has now helped send the rupee to a ninth consecutive weekly fall. The partially convertible rupee closed at 60.225/235, compared with its previous close of 60.13/14.

An overseas bond issue targeted at non-resident Indians is one of the options the government has, while the central bank can again open a dollar window for oil refiners to take a big chunk of the dollar-demand out of the market. A few representatives of small shops in Ruwi also echoed the same opinion.

"When compared to last year's business, this year, it is a loss. The most moving items were electronic gadgets and cosmetics. These are must items in non-resident Indians' bags when they travel back home. But this time, their relatives will be missing them. Nobody is purchasing electronic items or cosmetics. Only chocolates are being sold," Joy and his friends, who are running shops in Ruwi, said. 

"Recently, most of the budget airlines have also reduced baggage allowances drastically. This has also affected our business," they added.