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Travellers headed toward Europe this summer are facing a shortage of euros due to lesser availability of the currency used in the common economic zone, leading exchange houses Cox & Kings and Thomas CookNSE -0.02 % said. The physical shortage has also made the currency rather expensive.
“Euro is in great shortage in India,” said Ravi Menon, head of foreign exchange, India, Cox & Kings. During the peak season, banks are not selling Euros to all the money changers due to lower import of the currency notes, he added.
According to Cox & Kings, about five lakh Indians travel to Europe between April and July – the peak summer holiday season at home. They include leisure travellers, those visiting friends and family, and others availing of incentives to make that trip overseas.
“Euro 500 notes have been discontinued by European banks. That has led to a demand-supply mismatch in the market,” said Gagan Malhotra, head of Travel Money, the foreign exchange brand of FCM Travel Solutions.
The European Central Bank (ECB) stopped issuing 500 denomination notes because of concerns it could facilitate illegal activities. Even though the announcement was made in 2016, most countries terminated issuance of the note in January. Germany and Austria had an additional three months as their deadline was April 26.
Menon said that if Indian banks could import more currency notes, the supply could percolate down to exchange houses and travellers.
However, banks are unwilling to do so because of KYC compliance. Banks prefer that the rolling of cash is reduced.
The number of Indians travelling to Europe has also seen a growth of around 15% due to the ICC World Cup in the UK and growing popularity of Europe as a destination, said Daniel D’souza, president and country head, leisure, SOTC Travel.
As a result, most travel firms are encouraging travellers to use pre-paid cards. Kapil Goswamy, MD of BigBreaks.com, said the problem of a demand-supply mismatch for Euros is manifest due to the tourist season rush. “There is strong demand for the Euro currency at this time of the year,” he said.