HEMANTA RAJ KAFLE
KATHMANDU: The hike in customs duty pushed the price of gold to another record high today but there were fresh hopes that supply would ease.
The precious metal was priced at Rs 56,000 for a tola (11.664 grams) in the market today following the cabinet’s announcement to increase the import duty for gold to Rs 2300 per 10 gram. The cabinet had hiked the duty on gold in February to Rs 1500 to prevent illegal trade of gold with India due to the difference in customs duty.
“The additional Rs 800 and dollar appreciation in comparison to Indian currency has brought about the current record high price of gold,” pointed out president of Nepal Gold and Silver Dealers’ Association Tej Ratna Shakya.
Gold was priced highest at Rs 55,500 in November amidst European debt troubles. Bullion dealers had requested the finance ministry to hike the duty in Nepal to wipe out any smuggling-inducing duty differences caused by India’s customs hike.
The difference in duty has made gold cheaper is Nepal in comparison to India following the Indian government’s move to increase the import duty on gold from two per cent to four per cent in March. Due to the open border gold is being smuggled to India draining the supply here in the local markets.
“We had requested the authorities to increase import duty by Rs 1000 but Rs 800 is sufficient for now and it will help curb the illegal flow to India,” said Shakya. “The increased customs duty will solve 75 per cent of the problems that bullion traders have been facing regarding supply,” he added.
Customs difference that caused smuggling of gold to India had resulted in the short-supply of gold prior to the wedding season here. “The effect of customs hike is visible from today as hoarders have brought gold out in the market smoothening supply,” Shakya informed. This is the fourth such customs hike for gold import since mid-March 2010.