According to one such diamondtaire, the prices for diamonds and jewellery in terms of local currency appreciated sharply in the wake of devaluation of Thailand's currency, baht. This drove away local buyers from the market. On the other hand, those who had purchased diamonds or jewellery earlier have now turned sellers. Thus, prospects for effecting more imports to meet local demand has vanished as of now. Those who had piled up some inventories had to wait till the disposal of the same. As there were no chances for early recovery of the domestic market, Indian diamond dealers who had gone there mainly to do local business had no option but to return, instead of continuing to incur establishment and other expenditures.

The crisis has also affected diamond manufacturers in Thailand. The number of factories have shrunk from 32 to 23while the number of workers has fallen by 40 per cent at 6,000. Many of those factories which still remain in operation are unable to work at full capacity.

It may be interesting to note that in early 1980s, De Beers had adopted a policy of developing an additional diamond cutting centre in Bangkok. This induced many overseas manufacturers, mostly from Belgium to set up diamond cutting factories in Bangkok. A few local entrepreneurs also were induced to enter this field. However out of 23 factories, only about six are owned by the locals, while the rest are owned by overseas, mostly Europe-based firms.

When the demand for diamonds was booming in the latter half of 80s, these factories fared well , but the situation deteriorated after the currency crisis hit Thiland and other countries in the region.

Thai manufacturers who used to export to the neighbouring countries soon found that the demand had fallen in South Korea, Taiwan, Malaysia, Indonesia and Hong Kong. Moreover, it was already slow in Japan.Most manufacturers who are still in business have to turn to the US. However, there is cut-throat competition in that major consuming centre. Besides even some of the reputed buyers in the US ask for nearly 180-day credit. Though labour charges in Thailand have came down substantially, Thai manufacturers are finding it difficult to face severe competition in the US market. It may not be a surprise if some overseas firms roll down their shutters.