KATHMANDU, Aug 13: Even though price of gold is hitting new highs, country´s gold imports increased by a whopping 114 percent to 5,900 kg during fiscal year 2011/12, compared to imports figures of the previous fiscal year.
Value of imports increased by 150 percent to Rs 25.77 billion during the review period, thanks to rise in imports and strengthening weakening of US dollar against Nepali currency. Nepal had imported 2,800 kg gold worth Rs 10.72 billion in 2010/11.
The government has permitted import of 15 kg of gold a day through commercial bank from the last fiscal year, up from 10 kg a day in the previous fiscal year. It, however, had allowed banks to import 20 kg a day during February to July due to pressure from gold traders who argued that insufficient supplies had created black marketeering of the yellow metal in the market.
“Rise in imports and weakening of Nepali rupee against the greenback are the key reasons behind the whooping rise in gold import bill,” said Tej Ratna Shakya, president of Nepal Gold Silver Dealers Association.
In a bid to reduce growing trade deficit, the government had imposed ban on gold import between mid-August and mid-December in fiscal year 2009/10. Later, it imposed quota on gold imports, allowing designated banks to import and sell 10 kg gold a day.
According to traders, average daily demand for gold in the country hovers around 30 kg a day. If traders´ statement is anything to go by, the country is facing shortage of 15 kg of gold a day.
“This shortage had triggered smuggling of the yellow metal from India, China and Bhutan,” Shakya said, adding: “The government import quota cannot meet the demand in the market.”
Given the insufficient import quota, traders fear they will have to face shortage of yellow metal during the Dashain-Tihar festive season when demand goes up sharply. “If the government did not increase import quota, black-marketing and smuggling of the yellow metal will flourish during the festive season,” said Shakya.
Meanwhile, gold price went up by Rs 200 per tola (11.664 grams) and was traded at Rs 57,400 per tola in the domestic market on Monday. The association raised gold price even though the price of the yellow metal dropped to US $1620 during Monday´s trading. Gold trading in the international market had opened at $1623 on the day.