Govt raises daily gold import quota to 20 kg

KATHMANDU, Aug 12:

The government has upped gold import quota by 5 kg to 20 kg per day keeping in view increasing demand for the yellow metal amid falling price and the onset of festive season. The new quota will come into effect from Wednesday.

Issuing a circular on Tuesday, Nepal Rastra Bank (NRB) said commercial banks can now import 20 kg of gold per day until mid-October.

NRB had last raised gold import quota to 20 kg per day on mid-January last year for six months. The central bank reviews gold import quota after assessing the demand in the market. Generally, it increases import quota ahead of different festivals and wedding seasons and reduces during off-seasons.

"We are hopeful that the new import quota will help in maintaining balance between demand and supply of gold in the market ahead of the festive season," NRB Spokesperson Trilochan Pangeni told Republica. "The new supply quota will ease availability of gold as demand for yellow metal has increased due to significant drop in price in recent weeks."

Demand for gold has increased manifolds as customers have gone on a buying spree to cash in on significant drop in price. It has even resulted to shortage of gold in the market. Gold price had hit a four-year low of Rs 48,000 per tola (11.664 grams) on July 22.

Gold availability in the market has been affected in recent months as gold dealers and commercial banks are accusing each other of hoarding gold. Both the parties blame each other for hoarding gold amid declining price.

Local jewelers purchase gold from commercial banks as well as foreign returnees who are allowed to import 50 grams of gold each without paying any taxes. Some even buy gold from smugglers who offer the yellow metal at lower price, according to sources.

To discourage the practice of buying smuggled gold, the government recently reduced customs duty on import of gold by Rs 1,000 per tola to Rs 4,200.

Commenting on hike in gold import quota, gold dealers said even the new quota would be insufficient for festive seasons when daily gold demand hits peak. "The decision to increase import quota by 5 kg per day is a short-term remedy. To make the situation normal, the quota must be raised to 30 kg per day," Tej Ratna Shakya, immediate past president of Federation of Nepal Gold and Silver Dealers Association, said.

Meanwhile, Shakya has attributed the unprecedented demand for gold to price fall. "The rise in demand, which we are seeing now, is of temporary nature," he said, adding that daily demand for gold currently stands at 45 kg.

Source: Republica