KATHMANDU, AUG 31 - The general public have been forced to pay the price of the ongoing chaos in the gold market due to a tussle between gold traders and lowered availability of gold due to low import quota.

Common folk had to pay around Rs 1,180 more per 10 grams of gold as compared to the international price.

Retailers said gold was traded at Rs 31, 722 per 10 gm (Rs 37,000 per tola) on Monday although the price should have been at around Rs 30,542 as per the international price. The price in the market on Monday was higher than what the Nepal Gold and Silver Art Association (NEGOSAA) had fixed. It had fixed it at Rs. 31,370 per 10 gm (Rs. 36,590 per tola) for Monday.

The largest group of gold traders represented by Nepal Gold and Silver Dealers’ Association (NEGOSIDA) has refrained from fixing the gold price due to renewed differences with two other gold trading organisations although they struck a deal last Wednesday.

Protesting the NRB’s decision to allocate 50 percent quota to two other gold trading orginsations—NEGOSAA and Nepal Gem and Jwellery Association (NEGJA)—NEGOSIDA has been refusing to collect gold from the banks. Earlier, it had been enjoying cent percent rights of collecting gold from the banks.

The NEGOSIDA has been refusing to purchase gold from commercial banks and this has resulted in the low supply of gold in the market, thus pushing the price up. This was the reason for banks to complain to the Nepal Rastra Bank that the gold they had did not sell.

When the demand for gold is on the rise given the Teej and upcoming major festivals including Dashain and Tihar, customers are compelled to pay for artificially inflated prices.

“As there is no sufficient gold in the market, we have been buying gold from wholesalers by paying Rs. 400 extra per tola, which ultimately will be borne by the customers,” said Manoj Pokhrel, a gold retailer from Subidhanagar, Kathmandu. “We cannot find gold at a reasonable price in the market.” Although the law does not allow wholesalers to import gold, they are engaged in hoarding gold illegally.

Another retailer Suman Shakya, proprietor of Rudra Jyasa Pasa at Pulchowk, said most of the retailers stopped taking orders from customers due to shortage of gold.  Retailers say a tussle between the traders has worsened the situation further.

Tej Ratna Shakya, president of NEGOSIDA, said they were not collecting gold from banks as the NRB decision on quota was impractical given that his association comprised the widest network of traders.

However, NEGOSAA and NEGJA have started to issue recommendations and procure gold from the banks beginning last Thursday following a nine-point understanding with NEGOSIDA on last Wednesday.

NEGOSAA has issued recommendations for around 4 kg of gold and NEGJA for around 10 kg so far. The three associations on Wednesday agreed to form a joint task-force to deal with problems persisting in the domestic market and set the daily bullion price.

However, the second meeting of the task-force held on Sunday ended inconclusively as dispute arose on the quota to be recommended by each of them. They will hold a next round of meeting on Thursday.

Meanwhile, NEGJA on Monday blamed NEGOSIDA for creating the gold shortage by not issuing recommendations to collect gold from banks.

In a press release, it asked the central bank to increase the total quota to 20 kg per day from the existing 10 kg. The NRB is also considering increasing the quota of gold import between 15-20 kg per day. “If the balance of payment situation turns positive and foreign exchange reserve improves, we will definitely increase the quota,” said a senior NRB official.

On the other hand, the Cabinet on Monday decided to present a bill in the parliament to amend the Finance Act 2066 BS to regulate the import of gold. The bill to be introduced as an ordinance will be presented in the Parliament Secretariat on Tuesday and in the parliament on Sept. 5.  The import of gold will be suspended for a few days until the parliament endorses the bill so that importers would not be able to import gold at lower customs duty following the expiry of the current ordinance on Sept 3.

Two months ago, the government had hiked the customs duty to Rs 470 per 10 grams from Rs 130 through an ordinance.

 

Posted on: 2010-08-31 09:46

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