Shortage of IC prompts gold smuggling to India

PRABHAKAR GHIMIRE

KATHMANDU, Dec 9: Indian Currency (IC) has been sold for Nepali Rs 168 in black markets of southern Nepali bordering towns leading to smuggling of gold to India, eventually worsening the supplies of the yellow metal in the domestic market.
“On one hand gold has been imported illegally from India and China to ease the supply in local market, on the other hand some traders are smuggling gold to the southern neighbor for IC, which has been sold in black market in bordering towns,” Tej Ratna Shakya, President of Nepal Gold and Silver Dealers Association (Negosida) told Republica on Sunday.


Nepal Rastra Bank, the central monetary authority, has set value of Nepali Rs 160 against IC 100.

Shakya said a section of gold traders in bordering towns are engaged in gold smuggling to earn the IC which has been sold in black markets amid its prolonging deficit.

“ It is surprising that even though price is Rs 600 per tola less in India compared to Nepali market, black marketers of IC are managing to sell gold to Indian customers,” said Shakya.

He also said that the central bank failed to act on checking the illegal trade in the market.

Lila Prakash Sitaula, Executive Director of Foreign Exchange Division, didn´t rule out smuggling of IC in the bordering areas amid persisting shortage of IC in the market.

“On the back of shortage of IC in the form of cash, traders may have engaged in black marketeering in cash transactions,” said Sitaula.
The smuggling of gold to the southern neighbor has been reported at a time when domestic market is passing through prolonging supply deficit of the yellow metal.

To fulfill the domestic demands, local traders are illegally importing gold from Indian and Chinese markets.

The central bank has designated around two dozen banks to import gold to supply 15 kg of gold to dealers daily on recommendation of four associations of gold dealers including Negosida. However, the amount is half the domestic demand.

“Though domestic demands stand at around 30 kg per day, the supplies has been limited to only 15 kg which has prompted smuggling of gold from Indian market where gold is cheaper by Rs 600 per tola (11.664 grams) compared to Nepali market,” added Shakya. He also informed that black marketeering of gold is rife in the market because of the government is limiting its supply.

“We have credible information that our dealers are selling gold at Rs 1,000 higher than the price set by Negosida. We have frequently asked NRB officials to investigate into such reports and take action against those involved in black marketeering of gold, but our request has fallen on deaf ears,” he added.