Along with the price of gold, silver has also been going up sharply over a few month in an international market influenced by fluctuation in the value of the US Dollar and other developments in the global economy.[break]
Silver hit a new high of Rs 664.50 per 10 grams or Rs 775 per tola (11.664 gram) in the local market on Thursday while it sold at US$28.16 per troy ounce in the international market, a 30-year high. Nine months ago, silver was selling at Rs 425 per 10 gram in the domestic market.
Nepal has already suffered a setback in export of silver goods--one of the major handicraft exports-- due to a ban on imports imposed by the US and European countries, over the issue of silver mixed with cadmium- an element that is allergic and hazardous to health.
According to data made available by Nepal Rastra Bank (NRB) -- the central bank-- export of silverware and silver jewelries has dropped by a whopping 84 percent to Rs 7.2 million during the second month (mid-September to mid-October) of the current fiscal year 2010/11 compared to 44.9 million recorded during the same month the previous year.
Total silver export to overseas countries had dropped by 51.8 percent to Rs 126.6 million during fiscal year 2009/10 compared to Rs 262.4 million recorded during 2008/09.
“Soaring price of silver-- the major component of the price of silver products-- and bans on the import of silver products mainly by the US and European countries amid growing concern over the mixture of cadmium in silver have dragged down the silver export drastically,” Hari Bahadur Karki, vice-president of the Federation of Handicraft Associations of Nepal (FHAN), told Republica on Saturday.
Tej Ratna Shakya, president of Nepal Gold and Silver Dealers Association (Negosida), said exporters are reluctant to accept orders from overseas buyers for silver goods, fearing losses amid the soaring price of silver. “Cost of silver covers over 65 percent of the total cost of production of silver goods. So, slight changes in silver price have a huge impact on cost of production,” said Shakya.
Shakya also said that on the back of slowing overseas demand for silver products, the daily demand for silver from traders has halved to 100 kg per day. “Even traders willing to buy silver are not getting sufficient quantities,” said Shakya.
The production of silver goods has been limited due to lack of easy availability of silver in the market following the government´s policy of tightening imports of bullion over the last few months. NRB has sold 5,000 kg of silver to dealers through four auctions to ease supply in the market.
Also, concern among importers over mixture of cadmium in silver goods has caused a setback in the export of silverware and jewelries. International buyers are shifting to India and Thailand for silver goods as the cadmium mixture issue in Nepali silver products becomes stronger.
Though the government has initiated a process of setting up a cadmium test lab in the country for cadmium-free certification, the scheme has not materialized so far.
“The reputation of Nepali silver products has dipped due to some unscrupulous producers who are mixing cadmium in silver to bring down the price of silver goods,” said Karki. According to silver goods producers, cadmium looks like silver but is far cheaper.
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