The central bank invested a total of Rs 5.82 billion in between mid-March 2012 and mid-March 2013 on gold, marking a rise of 90.79 percent over the one-year period, the latest report of Nepal Rastra Bank shows. [break]
With this, NRB´s total overseas investment in the yellow metal has reached Rs 12.23 billion, which according to current exchange rate and international gold price roughly translates into 3.12 tons of holding.
“Yes, the central bank has taken a strategic step toward increasing exposure to gold as it is still considered a safe haven, despite the recent hiccup,” a high-ranking NRB official told Republica.
Currently, the central bank´s foreign reserve contains currencies like dollars of the US, Australia and Canada, euro, British pound, Japanese yen, Chinese Yuan and Indian rupee. It has also invested in treasury securities of India, the US and Australia, and special drawing rights, an international reserve asset created by the International Monetary Fund, among others.
Although the central bank still has significant exposure to these instruments, it decided to partially diversify its investment portfolio following outbreak of sovereign debt crisis in Europe and slow growth in other major economies of the world.
“At times when loopholes are difficult to identify, it is wise to make investment in assets that are considered safe in the long run and give better yields,” the official said, explaining the reason behind the central bank´s decision to increase gold holding. “Besides, our foreign exchange reserve is also in a relatively comfortable position, which gave us an opportunity to diversify from other instruments.”
Despite central bank´s higher exposure to yellow metal abroad, the money invested in gold till mid-March represented only 3.12 percent of total foreign reserve held by the central bank. This compares with 557.7 tons of gold, or 9.6 percent of total foreign reserve, held by India and 64.4 tons of yellow metal, or 25.4 percent of total foreign reserve, held by Pakistan, according to latest statistics of the World Gold Council.
Other South Asian countries also have higher gold holdings than Nepal, with Afghanistan holding 21.9 tons of gold, or 15.7 percent of total foreign reserve, and Bangladesh holding 13.5 tons of gold, or five percent of the total foreign reserve.
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