The initiative to lift the ban was taken after the new financial ordinance raised the import duty to Rs 1000 per 10 gram of gold.[break] "As the new tariff will discourage undue import of the yellow metal, we have decided to lift the ban and requested MoCS to announce the decision accordingly," said a MoF source.
Purushottam Ojha, secretary at the MoCs, stated that the ministry has already received a request in that connection. "We will formalize the decision soon," he told Republica. The MoCS can continue to impose or lift the ban on gold as per the Article 3 of the Export Import (Control) Act, 1999.
The government had imposed ban on gold import from September 3, 2010 mainly to thwart its ballooning import that exerted severe pressure on the balance of payment. Nepal Rastra Bank, the monetary authority, had attributed the sharp rise in gold´s import to duty differences between Nepal and India.
Although the government tried to jack up duty rate, the lack of broader understanding among major political parties had prevented it from taking any decision. The import of gold has crossed Rs 41 billion in the year 2009/10.
As the ban sparked shortage of gold in the market, the central bank in recent months has been auctioning gold and silver to ease the supply. It has so far auctioned out a total of over 400 kg of gold to traders.
Meanwhile, price of gold in domestic market has rose by around Rs 100 per 10 gram, touching an all time high of Rs 34035 per 10 gram. Persisting shortage of the yellow metal is credited for the rise, despite a fall in the price in the international market on Thursday. The price of gold in international bullion market dropped to US$ 1371 per troy ounce on Thursday from the US$ 1375 recorded a day earlier.
"Despite the fall in gold price in the world market, deepening shortage of gold in domestic market in the wake of ongoing import ban has resulted in the soaring price of gold," said Tej Ratna Shakya, president of Nepal Gold and Silver Dealers Association (Negosida).
According to him, as per the international price, gold should have been cheaper by Rs 100 per 10 gram compared to the price settled on Wednesday. However, gold price went up by Rs 100 per 10 gram amid the paucity as the supply of gold in the market is at standstill.
Despite the ongoing wedding season, when the demands for gold is supposed to be significant, the spiraling price has upset the gold business. Traders said daily demands for gold hovers around 35 kg against the expectation of 45 kg per day.
He said the already weakened supply of gold has further dwindled as smuggling of gold from India has virtually stopped following the budget speech that announced removal of the existing ban on gold import by private sector.
However, price of silver, as on Thursday, remains unchanged at Rs 681 per 10 gram.
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