Currency
Nepali currency weakened against a dollar by 36 paisa over this week, rendering imports expensive, but raising export incomes and remittances. A dollar was exchanged at Rs 75.16 on Friday.
Nepal Rastra Bank had fixed the exchange rate of a dollar at Rs 74.80 on Sunday. On the back of dollar bouncing back against the Indian currency, with which Nepali rupee is pegged, the Nepali currency shed 24 paisa on Tuesday, when a dollar was exchanged at Rs 75.04. On Wednesday, rupee gained 4 paisa and on Thursday it gained additional 1 paisa. However, it recorded a overnight drop of 17 paisa against a dollar when the market closed on Friday.
Rupee gained Rs 1.87 against a euro, but shed 11 paisa against a pound sterling over this week. On Friday, a euro was exchanged at Rs 108.26, while a pound sterling was exchanged at Rs 121.93.
Bullion
Gold became cheaper by Rs 8.50 per gram this week, as drop in the international prices of the yellow metal dragged down its price in the domestic market. The yellow metal was traded at Rs 27,135 per 10 grams on Friday.
Nepal Gold and Silver Dealers´ Association had opened the market at Rs 27,220 per 10 grams on Sunday. As the international prices soared, gold became expensive by Rs 85 per 10 grams on Monday and its further soared by Rs 120 per 10 grams on Tuesday. On Wednesday, it shed Rs 85 per 10 grams, but gained Rs 300 overnight on Thursday. On friday, however, gold price dropped by more than Rs 500 per 10 grams when the market closed.
The price of silver also dropped to Rs 441.50 per 10 grams on Friday from Rs 446 per 10 grams on Sunday. As Nepal meets domestic bullion requirements through imports, any fluctuation in international prices directly impacts the domestic price.
Looming liquidity crunch pulls Nepse down
Nepse index (-1.18%) went into downward mode after last week´s recovery, mainly due to book closures of several major companies. The market is also affected by the looming liquidity crunch in the economy and the price readjustments of various companies.
The Commercial Banking sub-index (-2.03%) was highly affected by the readjustment in stock price of Bank of Kathmandu (-Rs 442) post its book closure. Sahayogi Bikas Bank (+Rs 109) posted the top gain of the week as it announced its book closure on December 23 for 3:1 right shares and 25% bonus shares, thus minimizing the losses in the Development Bank sector (-0.95%).
The Insurance sector (-0.84%) did not fair well either as National Life Insurance (-Rs 30) shed value. Similarly, the ´Others´ sub-index (-0.39%) declined as Nepal Telecom´s (-Rs 2) share price depreciated. Appreciation in the stock values of National Hydropower (+Rs 10) and Butwal Power (+Rs 25) failed to lift the Hydropower sector (-1.95%) due to the book closure of Arun Valley Hydropower (-Rs 9).
The Finance sector (+0.17%) was the only sector to defy the market trend despite losses in stocks of Paschimanchal Finance (-Rs 107) and Reliable Finance (-Rs 155) which readjusted its market price post book closure.
On the declaration side, Laxmi Bank (+Rs 115) has proposed 5% bonus shares. Clean Energy Development Bank (+Rs 0) is closing its book on December 21 for 1:2.4 right shares and Siddhartha Development Bank is closing its book for 5% cash dividend. On the IPO front, Udhyam Bikas Bank closed its IPO issue on December 16 while Mahakali Development Bank allotted its IPO on December 14.
Book closure dates continue to profoundly impact the market. Kuber Merchant Finance (+Rs 19) closed its books for 1:2 right shares on December 14. With Nepal SBI Bank (-Rs 23) and Butwal Hydropower (+Rs 25) closing their books on December 18, the market might move further down. However, a swift increase in volume (Rs 369,553,401) and technical analysis tools indicate that the temporary uptrend is attempting to gain momentum.
Meanwhile, NRB raised inter-banking lending rate from 9.49% to 12%. NRB also decided that foreign banks will need at least USD 30 million to obtain a license and start banking services in Nepal.
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