Rupee continues to weaken

Nepali rupee devalued against US dollar over this week as well, rendering imports expensive, but also raising income of exporters and remittances receivers. Gold, on the other hand, became cheaper this week, even though prices rallied to a new high in the initial trading days.

Currency
Nepali rupee weakened by 42 paisa against a US dollar over the week, as the greenback bounced back in India with which currency the rupee is pegged. On Friday, a dollar was valued at Rs 73.91.

Nepal Rastra Bank (NRB) -- country´s monetary authority -- had set the exchange rate of dollar at Rs 73.49 when the market opened this week on Sunday. Although no change in exchange rate was recorded on Monday, rupee shed 6 paisa on Tuesday. It recorded a gain 20 paisa on Wednesday, but as demand for dollar grew strong in India, rupee shed whopping 50 paisa overnight on Thursday. Rupee further slipped by 6 paisa when the market closed this week on Friday.
Rupee weakened by a sharp Rs 1.34 against a euro, but gained 28 paisa against a pound sterling over the week. A euro was exchanged at Rs 106.59, while a pound sterling was valued at Rs 121.09 on Friday.

Bullion
Even though prices jumped sharply and hit new highs in the initial trading days, gold became cheaper by Rs 1,500 per tola (11.664 grams) in the domestic market this week. Dealers, who attributed the price volatility to rise in international investors´ concerns over weak US economy and Europe´s banking troubles, traded gold at Rs 43,640 per 10 grams (Rs 50,900 per tola) on Friday.

Bullion trading had opened this week with gold priced at Rs 44,925 per 10 grams on Sunday. As international investors rushed for safer haven amid dismal US economic outlook and banking problems in Europe, the yellow metal rallied sharply, becoming dearer by Rs 855 per 10 grams on Monday and further Rs 430 per 10 grams on Tuesday, hitting a new high of Rs 53,900 per tola. However, prices suddenly spiraled downwards over the next couple of days from Wednesday, after US initiated talks for fresh relief package and the price of oil slipped on the back of positive political development in Libya. Gold recorded overnight drop of Rs 1,285 per 10 grams on Wednesday and further plummeted by Rs 2,055 per 10 grams on Thursday. However, gold again jumped Rs 770 per ten grams on Friday, when the market closed this week.

The price of silver also dropped Rs 25.50 per 10 grams in the domestic market over the week. Silver was traded at Rs 1,029 per 10 grams when the market closed on Friday.