Rupee strengthens after 4 weeks of downward spiral
KATHMANDU, Nov 30: Nepali rupee finally snapped its 4-week long losing streak and strengthened against US dollar over this week after India currency, with which rupee is pegged, strength amid the Indian government´s agreement to decide the fate of a bill pushed to reform foreign investment regime through vote in the parliament.
Gold price, on the other hand, dropped by a whopping Rs 1,347 per tola (11.664 grams) in the local market this week as uncertainty over talks to avert US fiscal crisis eroded investors confidence in the global commodity market.
Nepali rupee gained 54 paisa against a US dollar over the week. This caused import cost to go down, something which is expected to bring some respite to consumers, but lowered receipts of exporters and remittance receivers. On Friday, a US dollar was exchanged at Rs 88.31.
Nepal Rastra Bank, the central monetary authority, had set the exchange rate of dollar at Rs 88.85 when currency trading opened on Sunday. But as worries over US fiscal crisis deepened and resistance to reform investment regime mounted in India, demand for dollar rose there, causing Nepali rupee to shed 30 paisa on Monday and another 35 paisa on Tuesday. But rupee managed an overnight gain of 28 paisa on Wednesday and further rose by another 20 paisa on Thursday and 71 paisa on Friday after the Indian government agreed to decide the fate of bill allowing foreign investment in multi-band retail through vote in the parliament.
Likewise, rupee gained 33 paisa against a pound sterling, but fell by a paisa against a euro over the week. A pound sterling was valued Rs 141.42 on Friday, while euro was exchanged at Rs 114.56 when the market closed this week.
Gold became cheaper by Rs 1,155 per 10 grams (or Rs 1,347 per tola) this week as its international price dipped sharply amid uncertainty over the US fiscal problem. The yellow metal was traded at Rs 51,870 per 10 grams (or Rs 60,851 per tola) on Friday.
Bullion trading had opened this week with gold priced at the record high of Rs 53,025 per 10 grams on Sunday. The price had hit the roof after investors rushed to safer haven, becoming nervous ahead of the talks on Green´s debt cut. The sentiment prevailed for the next two days as well.
However, after the uncertainty over US fiscal crisis took the center stage, gold price started to drop from Wednesday. In Nepal, gold became cheaper by Rs 300 on Wednesday. The price dipped overnight by Rs 600 per 10 grams on Thursday and further went down by Rs 255 per 10 grams when the market closed this week on Friday.
The price of silver also went down by Rs 10 per 10 grams over the week. On Friday, silver was traded at Rs 1,040 per 10 grams.