The loose diamond industry is operating worldwide which makes it logical that some countries push it more than others. Now there has been a sudden depreciation of the Chinese Yuan, which results in the looming of the U.S. interest rate, what does this mean for the diamond prices?
Last week the Zhou’s People bank of China allowed the CNY to depreciate by about 3.5%. Which means that the currency is now tradingagainst the USD for around CNY 6.4. Resulting in the fact thatit is more expensive for Chinese buyers to import loose diamonds if the currency is USD for importing the goods. The diamond prices of the loose diamonds have not changed on the diamond wholesale market, it is only more expensive for the Yuan to buy from Dollar base due to the deprecation of the CNY. According to Michael Huang, the dealers inChina are raising their diamond priceswith almost5% to compensate the currency loss. This raise in diamond wholesale prices in China is will mostly be felt by consumers buying retail diamonds in the coming weeks.
Since Chinesebuyers are one of the larger groups that buy diamonds,experts areexpecting to see moreloose diamondpurchases to be done outside China to avoid the increaseddiamond retailprices. However, the score of Chinese tourist that willgo abroad to buy luxury goods and diamondjewelrywillget lower. The buying power of the Chinesetourist is not as strong as before since they have fewer dollars to spend.Sounds quite depressing for the diamond industry you think? But it is not bad at all because the CNY and stock market’svolatility affects to deflation of real estate, which increases the investment,favourof loose diamonds and gold.In addition, lots of investors are counting their losses in moneythat they have put in the stockmarketsthese pasttwomonths.
So the resultof this situation isthatmore peopleshift their investmentto diamonds since that’s a solid and safe investmentbased on demand and supply and not currency drops or jumps. So this situation is not as depressing as you think and can even encourage the major Chinese buyers to invest more in quality products such as loose diamonds and diamondjewelry.