Gold Gets Cheaper Despite Rupee Devaluation

Nepali currency weakened against major convertible currencies, including the US dollar over the week, as the greenback bounced back strongly against the Indian rupee, with which domestic rupee is pegged. Drop in the value of currency, however, did not impact the gold lovers, as still sharper drop in the international price of yellow metal caused its price to go down in the local market.

Currency

Nepal currency vis-à-vis US dollar devalued by Rs 1.30 over this week, as Indian currency weakened against the greenback during the period. Nepali rupee was valued Rs 77.50 per dollar on Friday.

This yielded better returns for exporters as well as families of overseas workers, who received payment and remittances this week. However, the devaluation of local currency made imports expensive, which eventually could burden consumers of imported goods. Nepal Rastra Bank, the central bank, had fixed the rate of rupee at Rs 76.20 per dollar on Sunday. But rupee continued to face heat of the rebounding dollar throughout the week, weakening to Rs 76.45 per dollar on Tuesday and Rs 77.10 on Thursday.

Likewise, Nepali rupee weakened by 92 paisa against the pound sterling this week. On Friday, a pound was exchanged at Rs 127.12. Rupee also witnessed a drop of 74 paisa against the euro, which was exchanged at Rs 108.21 on Friday. Going by the open market exchange regime, the rate may vary with the commercial banks.

Bullion

Gold priced dropped by Rs 18.5 per gram in the domestic market over the week -- thanks to the decline in the prices of the precious metal in the international market. Gold was traded at Rs 23,665 per 10 grams on Friday.

According to Nepal Gold and Silver Dealers Association, gold was traded at Rs 23,850 per 10 grams on Sunday. Because of fluctuation in currency and international price, gold price dropped to Rs 23,490 on Wednesday. It inched upward to Rs 23,750 per 10 grams on Thursday, but dropped by Rs 85 per 10 grams on Friday. Despite the drop, dealers said the demand for yellow metal continued to remain low.

The price of silver also dropped to Rs 375 from Rs 377 per 10 grams this week. As Nepal fulfills its bullion requirements through imports, any fluctuation in the price of gold directly impacts domestic rates.