Currency
Nepali currency underwent a whopping devaluation of Rs 1.26 against a US dollar this week. This caused cost of imports and productions go up, but increased income of exporters as well as remittance receivers. On Friday, a dollar was exchanged at Rs 75.20.
Nepal Rastra Bank, country´s monetary authority, had set the exchange rate of US dollar at Rs 73.94 when the market opened on Sunday. But as dollar strengthened against Indian currency, Nepali rupee shed value over the following days with an exception on Tuesday, when it gained 15 paisa. On Wednesday, it weakened by 45 paisa, compared to Tuesday, and further shed 30 paisa on Thursday. Rupee further depreciated by 45 paisa against a dollar when the market closed on Friday.
Nepali rupee gained 61 paisa against a euro, but shed 25 paisa against a pound sterling this week. On Friday, a euro was exchanged at Rs 96.98, while a pound sterling was valued Rs 117.80.
Bullion
Gold became dearer by Rs 405 per 10 grams in the local market this week. Dealers that traded yellow metal at Rs 30,000 per 10 grams on Friday attributed the rise to cumulative impact of rupee devaluation and shortage of yellow metal in the market.
Nepal Gold and Silver Dealers´ Association, which sets prices of the precious metal in the market, had opened the market with gold priced Rs 30,180 per 10 grams on Sunday.
The price remained unchanged on Monday but slid by Rs 85 per 10 grams on Tuesday. But price soon rallied, making gold dearer by Rs 190 per 10 grams on Wednesday, compared to previous day, and further Rs 175 on Thursday. Gold became further expensive by Rs 125 per 10 grams when the market closed Friday.
The price of silver too increased in the local market over the week. Silver was traded at Rs 482 per 10 grams on Friday.
As the country is totally dependent on international market for its domestic bullion demand, any fluctuation in the global market is directly reflected in the domestic market.
Stock
The secondary market experienced another week of downward spiral losing 3.73 points with the Nepal Stock Exchange (Nepse) index closing at 454.68 points on Thursday.
Although the market turnover went up by 2.35 percent, investors´ confidence can still be considered low as a significant amount of market turnover (approximately 48 percent) was accounted for by the trading of key commercial banks, including Everest, Standard Chartered, Bank of Kathmandu and Nabil Bank. Higher supply pressure still seems to shadow the market as a result of reinforced political-economic concerns.
The Hydropower sector (-3.88 percent) booked the highest loss amongst all the sub-indices as Butwal Power Company (-Rs 51) and Chilime Hydropower Company (-Rs 23) shed value. Despite Oriental Hotel Limited (+Rs 11) posting a considerable gain, the Hotels sector (-1.93 percent) declined as share price of Soaltee Hotel Limited (-Rs 10) could not sustain its previous week´s gain.
Despite the share price of Nerude Laghubitta Bikas Bank (+Rs 50) topping the gainers´ list, the Development Banking sector (-1.74 percent) plunged for the third consecutive week as Clean Energy Development Bank (-Rs.350) post book closure price adjustment and Himchuli Bikas Bank (-Rs 92) ended amongst the top losers. The ´Others´ sub-sector (-0.64 percent) depreciated as share value of Nepal Telecom (-Rs 4) declined.
Likewise, the Commercial Banking sector (-0.57 percent) tumbled as the share prices of key banks like Siddhartha Bank (-Rs 31), Sunrise Bank (-Rs 16), and Nepal Credit & Commerce Bank (-Rs 11) plummeted. The Insurance Sector (-0.52 percent) followed suit due to decline in share prices of Siddhartha Insurance Limited (-Rs 10) and Nepal Life Insurance Company (-Rs 45). Nevertheless, the Finance sector (+0.12 percent) managed to rebound as share prices of Lumbini Finance (+Rs 29) and Standard Finance (+Rs 12) went up.
Amongst news and highlights, the new directives issued by the central bank states that the promoters of banks and financial institutions, who have taken loans by pledging shares, will have to bring down their collateral size to 50 percent of their total shareholding within the current fiscal year. Furthermore, the central bank has brought the national-level development banks under the Basel-II framework.
On the declaration front, the board of directors of Everest Bank has announced 30 percent bonus and 30 percent cash dividend which is yet to be approved. Similarly, Business Development Bank has declared 8 percent cash dividend. On the IPO front, Jyoti Bikas Bank´s ordinary share application begins on August 16.
Stock forecast
Technical analysis indicators signal a continuation of the current downtrend; however, some downward retracement can be expected.
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Rupee weakens, gold unchanged
