Rupee depreciation makes gold dear

Nepali currency weakened against major convertible currencies including the US dollar over the week as the greenback gained against Indian currency, the only currency with which rupee is pegged. Rise in international gold prices coupled with currency movement pushed up the price of gold in the domestic market.

Currency

Nepali currency depreciated by 23 paisa against one US dollar over the week as the greenback gained in the Indian currency market. Rupee was valued at Rs 78.29 per dollar on Friday.

Nepal Rastra Bank had fixed the exchange rate of one US dollar at Rs 78.06 on Sunday. As dollar posted sharp gains against Indian currency, rupee was devalued at Rs 79.01 on Tuesday. Rupee, however, went on to appreciate over the next couple of days and was valued Rs 78.21 on Thursday, before weakening by 8 paisa on Friday.

Rupee also recorded a drop of Rs 1.24 and Rs 1.15 against euro and pound sterling respectively over the week. A euro was exchanged at Rs 110.10 on Friday, while a pound sterling was valued Rs 128.17 on the day. Going by the open market exchange regime, the rate may vary with the commercial banks.

Bullion

Gold became expensive by Rs 34.50 per gram over the week and was retailed at Rs 23,920 per 10 grams in the domestic market Friday. Dealers termed the rise as an impact of global gold price rally and weakening of rupee.

According to Nepal Gold and Silver Dealers´ Association, gold was traded at 23,575 per 10 grams on Sunday and continued to become expensive in the following days. It was priced at Rs 23,705 per 10 grams on Wednesday and Rs 23,835 on Thursday. On Friday also it gained Rs 85 per 10 grams.

The price of silver, on the other hand, dropped to Rs 353 per 10 grams on Friday from Sunday´s Rs 356. As Nepal fulfills domestic bullion requirements through imports, any fluctuation in international prices directly impacts the domestic prices.

Source: Republica