KATHMANDU, April 9, 2012
Though the demand for gold is increasing in the domestic market, traders in the Kathmandu Valley complain that they are not receiving adequate supply of the yellow metal to fulfill the demand.
Officials of Nepal Gold and Silver Dealers´ Association (Negosida) said the daily demand for the yellow metal has increased by around 10 kg per day over the week and reached 30 kg a day.
Gold has been in short supply in the local market ever since the Indian government raised import duty on gold to 4 percent from 2 percent on March 16.
The Indian government hiked basic customs duty on gold citing widening current account deficit triggered by "growth of almost 50 percent in imports of gold and other precious metals in the first three quarters of this year".
The latest change in tax rate means Indian traders will have to pay IRs 1,080 (Rs 1,728) while importing 10 grams of gold -- up from IRs 540 in the past -- which is lower than Nepal´s tax rate of Rs 1,500 per 10 grams. "To take benefit of the tax difference, domestic traders may have hoarded gold before sending them to India through illegal channels," a gold market expert told Republica on condition of anonymity.
The local market currently receives 20 kg of gold through various banks. Another 2 to 10 kg of the yellow metal also hits the market per day from households and other channels.
"But now the market is not even receiving the 20 kg of gold distributed by banks every day because those with direct access to the yellow metal offered by financial institutions are hoarding it," the expert said.
Negosida said the supply situation will improve if the government allows traders to import gold under open general licenses (OGL). "But it has not yet responded to our demand," Negosida President Tej Ratna Shakya said. "We have even asked the central bank (Nepal Rastra Bank) to increase the supply as 20 kg of gold per day is not enough during the peak season."
Gold was traded at Rs 53,500 per tola (11.664 grams) in the domestic market on Sunday, same as on Friday. Gold was priced at US$ 1,636 per troy ounce in the international market.
Source: Republica
Though the demand for gold is increasing in the domestic market, traders in the Kathmandu Valley complain that they are not receiving adequate supply of the yellow metal to fulfill the demand.
Officials of Nepal Gold and Silver Dealers´ Association (Negosida) said the daily demand for the yellow metal has increased by around 10 kg per day over the week and reached 30 kg a day.
Gold has been in short supply in the local market ever since the Indian government raised import duty on gold to 4 percent from 2 percent on March 16.
The Indian government hiked basic customs duty on gold citing widening current account deficit triggered by "growth of almost 50 percent in imports of gold and other precious metals in the first three quarters of this year".
The latest change in tax rate means Indian traders will have to pay IRs 1,080 (Rs 1,728) while importing 10 grams of gold -- up from IRs 540 in the past -- which is lower than Nepal´s tax rate of Rs 1,500 per 10 grams. "To take benefit of the tax difference, domestic traders may have hoarded gold before sending them to India through illegal channels," a gold market expert told Republica on condition of anonymity.
The local market currently receives 20 kg of gold through various banks. Another 2 to 10 kg of the yellow metal also hits the market per day from households and other channels.
"But now the market is not even receiving the 20 kg of gold distributed by banks every day because those with direct access to the yellow metal offered by financial institutions are hoarding it," the expert said.
Negosida said the supply situation will improve if the government allows traders to import gold under open general licenses (OGL). "But it has not yet responded to our demand," Negosida President Tej Ratna Shakya said. "We have even asked the central bank (Nepal Rastra Bank) to increase the supply as 20 kg of gold per day is not enough during the peak season."
Gold was traded at Rs 53,500 per tola (11.664 grams) in the domestic market on Sunday, same as on Friday. Gold was priced at US$ 1,636 per troy ounce in the international market.
Source: Republica
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