Petro prices down, gold glitters, rupee weakens

KATHMANDU,Jan 1:

The year 2014 can be termed good for consumers as prices of petrol and diesel went down by Rs 14 and Rs 11 per liter respectively. But volatility in gold price left consumers confused throughout the year. Similarly, country´s import bill increased due to weakening of rupee currency vis-à-vis US dollar. Rupee fell to 101.16 against US dollar on the last trading day of the year.

PETROLEUM PRODUCTS
The government introduced automatic pricing mechanism for three petroleum products -- petrol diesel and kerosene -- in September to bring down ballooning loss of the state-owned Nepal Oil Corporation (NOC). Based on this mechanism, NOC adjusts fuel prices every 15 days on the basis of price rates supplied by Indian Oil Corporation (IOC).

At the beginning of 2014, petrol was priced at Rs 130 per liter, while diesel and kerosene were retailed at Rs 103 per liter each. But after the NOC adopted automatic pricing mechanism, price of petrol has dropped to Rs 11 per liter, and diesel and kerosene by Rs 92 per liter each.

"The introduction of automatic pricing mechanism has helped to reduce our loss," Mukunda Ghimire, spokesperson of NOC, told Republica. "It has been beneficial for consumers, as they are getting petroleum products at lower prices."

However, this is not the first time that prices of petroleum products have gone down by this scale. In 2008/09, NOC had reduced petroleum prices in line as per the price in the international market.

BULLION
Gold price increased by Rs 500 per tola (11.664 grams) over the year. On January 1, 2014, gold was traded at Rs 51,600 per tola. Gold price increased to Rs 52,100 per tola on the last trading day of the year.

People exchanging wedding vows in the recent wedding season (November) were lucky as the price fell down to Rs 49,100 on November 6 compared to Rs 57,500 per tola on March 14.

According to Mani Ratna Shakya, president of the Federation of Gold and Silver Dealers´ Association, price recorded on March 14 was the lowest in two years.

However, fluctuation gold prices affected sales of jewelers this year. "Sales were down by around 40 percent this year. Average daily sales in 2014 were about one-third of average daily sales recorded five years ago," said Shakya. "Declining disposable income of Nepalis, volatility in god price, and confusion among consumers regarding quality of gold sold in the market are some of the reasons that affected our sales."

RUPEE
Nepali rupee lost a whopping Rs 2.53 against US dollar this year as Indian currency, with which rupee is pegged, continued to depreciate against the greenback.

Rupee was exchanged at Rs 101.72 on Wednesday, the last trading day of the year, after falling to a one-year low of 102.17 against US dollar a day earlier.

US dollar was valued Rs 99.19 on January 1, 2014.

Indian currency fell to a lowest of 63.79 against US dollar this year. According to Indian newspaper Financial Express, on an annual basis, Indian rupee has lost ground for at least fourth year in a row, although the decline remains much lower at about 2 percent against the US greenback so far in 2014. In comparison, the Indian rupee had depreciated by over 11 percent in 2013 and by more than 18 percent in 2011. The decline was relatively smaller at about 3 percent in 2012.

"After remaining stable for most part of the year, the Indian rupee showed some depreciation in later part of November and early December. The recent fall in the rupee was on account of widening trade deficit, increased domestic demand for the dollar and global uncertainty," the daily quoted analysts.

Source: Myrepublica