Rupee gains, gold price drops

KATHMANDU, Dec 25: Despite Ministry of Finance´s (MoF´s) reports that the economy reeling under huge BOP (balance of payment) deficit, Nepali currency recorded a gain against US dollar -- thanks to rupee´s peg with stable Indian currency. Gold, on the other hand, continued its downward spiral in the domestic market, as drop in global gold prices and rupee´s gain cheapened imports. [break]



Currency



Nepali currency gained 17 paisa against a US dollar this week, as greenback weakened against Indian currency. This made imports cheaper but dragged down the volume of exports income and remittances received on Friday, compared to Sunday. A dollar was exchanged at Rs 75.07 on Friday.



Nepal Rastra Bank had fixed the exchange rate per dollar at Rs 75.24 on Sunday. As dollar spiraled down against Indian currency, rupee gained 19 paisa against the greenback on Monday. However, it shed 10 paisa on Tuesday, another one paisa on Wednesday and eight paisa more on Thursday, when dollar cat-bounced to Sunday´s level. But on the Christmas Day rupee recorded a 17 paisa gain against dollar.



Nepali currency gained 37 paisa against the euro and Rs 1.59 against the pound sterling this week. A euro closed at Rs 107.85 on Friday, while a pound sterling was exchanged at Rs 120.16 on the day. Going by the open market exchange regime, the rate varied marginally among commercial banks.



Bullion



Gold became cheaper by Rs 21.5 per gram in the domestic market this week, as rupee´s gain against dollar and decline in prices of yellow metal in the international market drove away speculative investors both in local and global markets. On Friday, gold was traded at Rs 26,920 per 10 grams in the country.



Nepal Gold and Silver Dealers Association, which sets domestic bullion prices based on price movement in the New York Commodity Mercantile Exchange, had opened the gold market at Rs 27,135 per 10 grams on Sunday. With demand soaring, gold became expensive by Rs 85 per 10 grams on Monday. However, prices slipped fast over the next couple of days, compelling dealers to trade gold at Rs 26,580 on Wednesday. On Thursday and Friday, gold prices rallied by Rs 25 and Rs 215 per 10 grams respectively.



Following the international trend, silver prices too dropped in the domestic market over the week. On Friday, 10 grams of silver was traded at Rs 439. As Nepal fulfills domestic bullion demands through imports, any change in international prices of gold and silver directly impacts the domestic price movement.

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