IC has been in short supply for some time, but traders said the situation has aggravated since last two month as illegal imports of gold from India has increased alarmingly. [break]
Higher demand of IC in the local market, according to traders, has fuelled exchange rate of IC in informal market has jumped to Rs 163 per IRs 100 -- three rupees higher than the official rate fixed by the central bank.
As per the Nepal Rastra Bank´s directives, banks are allowed to provide exchange facility of up to IRs 25,000 in a day or maximum of Rs 200,000 in a month to a party. But on Monday Republica found a number of clients approaching senior bank officials to get just a few thousand IC.
Bankers said they are facing difficulty to deal with soaring demand as the central bank itself has tightened IC supply. Some of the bankers complained NRB is presently issuing as less as IRs 200,000 a week, whereas demand runs in millions.
NRB officials refused to talk about the issue, but sources said that the latest spate of IC shortage surfaced particularly after gold dealers started relying heavily on supply made from India.
In a bid to pressure the Nepal Rastra Bank (NRB) to allow them to import gold directly, gold dealers, who have been protesting the policy of allowing commercial banks to import gold and sell them at the local market, are deliberately buying only five kg gold per day from the banks whereas the daily demand, according to Nepal Gold and Silver Dealers Association (Negosida), stands at 25 kg.
Despite such a huge supply mismatch, consumers say there is no shortage of gold in the market.
"Clearly, supply from India is bridging the gold deficit. We estimate some 15 to 20 kg is presently entering Nepal everyday through informal channel," said Negosida President Tej Ratna Shakya.
If the association´s claim is anything to go by, then as much as IRs 39 million is flying away from the country everyday.
Apart from gold, concerned officials said that the informal trade has grown for almost all products. Growing use of credit cards by visiting Indian tourists and soaring trade deficit too have affected normal supply of IC.
Sources said the central bank has recently increased inspection in major trading hubs along the border to dig out facts about latest spate of IC shortage.
Despite the tightening of supply, the central bank is still facing difficulty maintaining its IC reserve. Records show, IC reserve has dipped by more than 5 billion even though NRB has already bought IRs 46.53 billion by selling US$1.20 billion to finance the trade deficit, which stood as much as Rs 87 billion over the first five months of 2010/11.
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