Gold fades as rupee rebounds

Nepali currency strengthened vis-à-vis US dollar this week, as the greenback went through a consistent drop in demand in India with which Nepali rupee is pegged. As a result, gold price dipped in the domestic market over the period.

Currency

Nepali currency gained 70 paisa against a US dollar this week. This rendered imports cheaper, but also lowered income of exporters as well as remittance receivers. On Friday, a dollar was exchanged at Rs 74.85.
Nepal Rastra Bank, country´s monetary authority had set exchange rate of US dollar at Rs 75.55 when the market opened this week on Sunday. But as gold shed value against Indian currency, Nepali rupee gained 15 paisa on Monday.

Although rupee shed 5 paisa against a dollar on Tuesday, it gained 40 paisa overnight on Wednesday. Rupee gained 5 paisa on Thursday and further 20 paisa when the market closed on Friday.

Nepali rupee, however, weakened against a euro by 15 paisa and a pound sterling by Rs 1.21 this week. On Friday, a euro was exchanged at Rs 97.51 and a pound sterling at Rs 116.86.

Bullion

Even as the international price of gold remained fairly stable, the price of gold declined in the domestic market by Rs 625 per 10 grams this week. Dealers, who traded the yellow metal at Rs 29,535 per 10 grams on Friday, attributed the drop to gains recorded by rupee against the US dollar.

Nepal Gold and Silver Dealers´ Association, which sets prices of the yellow metal in the market, had opened the market with gold priced at Rs 30,160 per 10 grams on Sunday.

Even as dealers complained of deepening shortage of the yellow metal, gold price jumped just Rs 20 per 10 grams on Monday. But the price started to dip from Tuesday largely due to gain of rupee in the currency market.

According to the association, gold price declined by Rs 180 per 10 grams on Tuesday, compared to Monday, and further dropped Rs 420 per 10 grams on Wednesday. While the price remained unchanged on Thursday, it nominally went down by Rs 45 per 10 grams when the market closed this week on Friday.

The price of silver too declined in the local market this week. Silver was traded at Rs 478 per 10 grams on Friday, compared to Rs 480 recorded on Sunday.

As Nepal is totally dependent on international market to fulfill its domestic bullion demand, any fluctuation in the global market is directly reflected in the domestic market.
Credit- myrepublica.com, july 30