Gold dearer despite currency appreciation

KATHMANDU, July 24: Nepali currency gained against US dollar over this week as the greenback devalued against Indian currency with which rupee is pegged. Despite appreciation of rupee, sharp rise in the international price of gold made gold expensive in the domestic market during the period.[break]



Currency



Nepali currency appreciated by 42 paisa against a US dollar over this week as greenback weakened in the Indian currency market. Rupee was valued at Rs 77.81 per dollar on Friday.



Country´s monetary authority Nepal Rastra Bank had fixed the exchange rate of a US dollar at Rs 78.23 on Sunday. Dollar recorded a nominal gain against Indian currency on Monday, subsequent to which rupee devalued by 2 paisa per dollar on the day. However, rupee gained a sharp 68 paisa against a dollar on Tuesday, when exchange rate of a dollar dropped to Rs 77.52. It slipped marginally over the next three days before settling at Rs 77.81 per dollar on Friday.



Contrary to gain recorded against dollar, rupee dropped against euro by 61 paisa and pound sterling by 70 paisa during the week. A euro was exchanged at Rs 110.84 on Friday, while a pound sterling was valued Rs 128.47 on the day. Going by the open market exchange regime, the rate may vary with the commercial banks.



Bullion



Gold became expensive by Rs 255 per 10 gram over this week and was retailed at Rs 24,175 in the domestic market on Friday. Dealers attributed the rise to increase in the global price of the yellow metal.



According to Nepal Gold and Silver Dealers´ Association, gold was traded at 23,920 per 10 grams on Sunday. But the precious metal continued to become dearer over the following days to Rs 24,090 per 10 grams on Tuesday and Rs 24,175 on Thursday.



Silver price also went up to Rs 362 per 10 grams on Friday. As Nepal fulfills domestic bullion requirements through imports, any fluctuation in international prices has a direct impact on domestic prices.



Stock



The market fluctuated throughout the week to close at 737.84 points with a nominal gain of 0.27%. The market was in correction mode after witnessing a sudden boost last week following the budget announcement.



The Commercial Banks sector (+2.38%) was the biggest gainer this week supplemented by increases in the share prices of Nepal Bangladesh Bank (+Rs 80) which is believed to have booked a healthy profit in the current fiscal year. Among other news in the sector, Bank of Kathmandu (+Rs. 40) was the key newsmaker. The bank held its special AGM on July 23 and announced its new management team led by Narendra Basnet as chairman of the board. Radhesh Pant, the previous managing director at Bank of Kathmandu, assumed his role from July 24 as the new CEO of Kumari Bank (+Rs. 80) which was another top gainer.



The Finance sub-index (+1.04%) was pushed up as right shares were declared by several finance companies, led by Lord Buddha Financial Institution (+Rs. 43) which declared 2:1 right shares. The remaining sub-indices, however, posted a decline. The ´Others´ sub-index (-5.18%) shed the biggest points as the sector was dragged down by Nepal Telecom (-Rs. 32). The Hydropower sub-index (-4.70%) was unable to maintain its big gains from last week and suffered a decline as shares of Butwal Hydro Power (-Rs 24) and Chilime Hydropower Company (-Rs.70) lost value. Insurance Companies sub index (-0.82%) also faced a dismal performance unlike the previous week. Malika Vikas Bank (-Rs. 819) share prices adjusted after the book closure for its 1:3 right shares to post the biggest loss among all companies pulling down the Development Bank sub-index (-0.68%).



Despite the lackluster performance of the NEPSE index, investor confidence sustained itself as the overall market turnover (Rs. 407,910,233) increased by 3.52% indicating that investors have stepped out of the sidelines to trade in the secondary market. Bulk trading of shares of Nepal Bangladesh Bank and National Hydropower was minimal this week signifying that the price hike of Nepal Bangladesh Bank shares was genuinely driven by investor interest. With the strengthening of the trading volume in the market and a positive investment climate, further corroborated by technical analysis charts which indicate a bullish divergence, it is expected that NEPSE will advance next week as more fourth quarter results trickle in.

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