NRB to study country’s gold demand in market

AMID complaints from traders that the quota imposed by the central bank on the daily supply of gold from banks is inadequate, Nepal Rastra Bank (NRB) Governor Yuba Raj Khatiwada on Friday said the central bank will conduct a study on the country’s gold market. Speaking at the inaugural ceremony of the first annual general meeting of the Federation of Nepal Gold and Silver Dealers’ Association (FENEGOSIDA), Khatiwada said the NRB study will find out the exact demand of the yellow metal and end speculations about the demands in the market. “We want the private sector to support us in conducting the study,” he said. NRB has allowed commercial banks to supply 15 kg of gold every day, while traders say the demand is over 40 kg a day. The NRB imposed the quota system in 2009 as it contributed to massive trade deficit. He, however, said the government cannot be flexible on gold import as long as the Indian government remains strict on it, given the high possibility of smuggling of the metal to India from Nepal. “The Indian government has controlled gold imports as it accounted to around 10 percent in the import volume of India,” said Khatiwada. “Under such circumstances, even allowing a supply of 200 kg a day here will not be sufficient.” Citing the upcoming festivals in the country, Khatiwada, however, said the central bank will soon increase the quota to 20 kg a day. FENEGOSIDA president Mani Ratna Shakya asked the government to allow traders to import gold as per their wish as, according to him, the current mechanism (getting it from the banks) is complicated. Although traders and individuals were allowed to import gold in the past, the central bank stopped that practice after the country’s balance of payment turned negative. Traders also expressed reservations on the government’s failure to introduce monitoring directives on gold trading. Due to protest from traders, the government had to stop monitoring the gold market, despite the fact that it had found many irregularities, including compromise on quality and sale of the metal through weighing machines that were tampered with. Vice- President of the FNCCI Bhaskar Raj Rajkarnikar urged the government to address the concerns of the traders.