Rupee gain drags gold down

KATHMANDU, Jan 1: Nepali currency recorded a nominal gain against the US dollar this week as a relatively stable Indian currency, to which the Nepali rupee is pegged, strengthened against the greenback. On the back of the rupee gain and dropping global prices, gold continued its downward spiral in the domestic market this week as well. [break]



Currency



Nepali currency gained 12 paisa against one US dollar this week, as demand for the greenback dropped in the Indian market, dragging its value down over the period. The gain reduced prices of imports but also shrank the income of exporters as well as remittance receivers. One dollar exchanged at Rs 74.95 on Friday.



Nepal Rastra Bank, the country´s monetary authority, fixed the exchange rate of the dollar at Rs 75.07 on Sunday. As Indian currency strengthened against the dollar, the rupee gained 12 paisa against the greenback on Monday. However, the exchange rate remained unchanged throughout the remaining week days. As a result, the exchange rate of the dollar remained fixed at Rs 74.95 till the market closed on Friday.



Nepali currency, however, slipped against the euro by 16 paisa and against pound sterling by 72 paisa this week. According to NRB, the euro closed at Rs 108.01 on Friday, while pound sterling was exchanged at Rs 120.88 that day. Going by the open market exchange regime, the rate varied marginally among commercial banks.



Bullion



Gold became cheaper by Rs 17 per gram in the domestic market this week, as the rupee´s gain against the dollar and decline in prices of the yellow metal in the international market drove away speculative investors both in the local and global markets. On Friday, gold traded at Rs 26,750 per 10 grams in the country.



Nepal Gold and Silver Dealers Association, which sets domestic bullion prices based on price movements in the New York Commodity Mercantile Exchange, had opened the market at Rs 26,920 per 10 grams on Sunday. With demand for the yellow metal growing in the international market, gold prices jumped to Rs 27,050 per 10 grams on Monday. However, prices dropped overnight by Rs 85 per 10 grams on Tuesday and an additional Rs 85 on Wednesday. The price thereafter remained unchanged till Friday.



Silver prices, on the other hand, remained stable at Rs 439 per 10 grams in the domestic market this week. As Nepal fulfills its domestic bullion demands through imports, any change in the international prices of gold and silver directly impacts domestic prices.

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Rupee gain drags gold price down