The sealing of international borders, the resultant travel restrictions imposed by most countries and the fear of catching the COVID-19 infection have severely impacted the foreign exchange industry, which is deeply integrated and works like an ancillary to foreign travel.
Sudarshan Motwani, founder & CEO, BookMyForex.com said, “The April to July summer holiday season is when a large number of people travel abroad, especially to Europe and U.S., to avoid the hot weather in India. This season could witness a near-complete washout.”
“It is hard to see business as usual or imagine people going out and enjoying themselves on a beach or in restaurants abroad,” he said.
Mr. Motwani said that forex players might be able to see some travel starting June or July this year, but that would be mostly of those returning home, very essential business trips or to visit relatives in emergency situations. “There are no signs of people travelling abroad for the next six months for leisure trips or events or conferences even if the lockdown is over, due to the fear-filled environment,” he said. Economic conditions will leave lesser disposable income in the hands of the people and that will impact foreign travel.
Currently, foreign exchange players are relying mainly on the money transfer business and card re-loads for people who are either abroad or have their close relatives living overseas, for daily expenses.
These businesses have also seen some downturns.
There are over 2,000 full-fledged money changers (FFMCs) registered with RBI in India. However just about 2% of these registered players are mid-sized to large organisations including a few fintech online players.
While the large players in this sector would be struggling to stay afloat due to high expenses on account of rentals and employee costs, the very small stores have their own share of struggle.
Chaitanya Dhingra, Director of Mark Forex Hub India Pvt. Ltd. who runs two stores in Delhi/NCR said, “We are seeing a near-zero-business situation. People started selling their unspent or surplus forex due to a considerable increase in the rates of currencies such as the U.S dollar and Euro when the crisis started.”
“Many money changers purchased currencies from customers but there’s not enough market to sell these as there is no demand right now due to travel restrictions. All this has led to a large holding of stocks or sell-off, sometimes even booking small losses,” he said.