Ukraine-Russia conflict: Gold price reaches all-time high in Nepal

Setting out a new all-time-high record, the price of precious 24 carats yellow metal on Wednesday reached 105,500 Nepali Rupees as a result of the ongoing Ukraine-Russia conflict that entered the fourteenth day today.

Earlier, the price of gold had touched the high point of 103,500 (Nepali Rupees) when the COVID pandemic was crumbling the world economy. On Wednesday, the price increased by a whopping Rs 2500 per tola.

"The price of gold is increasing day by day. As the price is soaring high, the number of footfalls and sales has dipped down, the market is facing setbacks due to the rise in price because of the conflict between Russia and Ukraine. As price soars, the flow of customers is receding and the demand remains low," Puja Bhandari, one of the gold merchants in New Road of Kathmandu told ANI.

As the price of gold has high exchange value and is considered an investment, people now are vying to sell their possession. Nestled in between India and China, the price of gold is a determinant of Nepal's transaction that occurs dominantly in both countries.

With Russia and Ukraine in a state of war, the price of each and every commodity and essential has already increased across the globe. As people rush to secure their funds by investing in gold the demand has soared within a short time shooting up the price.

The latest regulation of the central bank of Nepal, the Nepal Rastra Bank (NRB) also has resulted in the price of yellow stone being dearer. Earlier this month NRB limited the import of gold to 10 kg per day.

Issuing a circular to banks and financial institutions on March 6 NRB slashed the import quota by half. Earlier, 20 kg of gold could be imported daily. The central bank has halved the import quota of gold being alert at a large amount of foreign currency spent for the purpose.

Traders, on the other hand, have been demanding to take up the quota to 30 kg of gold daily. Nepal has imported gold worth Rs 23.26 billion in the first six months of the current fiscal year. This is 90 per cent more than the same period last year.

The central bank has been imposing restrictions on imports of various commodities in recent times as foreign exchange reserves have been steadily declining. As the market is at standstill with trade nose-diving down experts warn that this would impact Nepal's revenue generation.

Dharma Sundar Bajracharya, Secretary-General of Federation of Nepal Gold and Silver dealer's association told ANI, "If the jewelry market didn't remain afloat then the taxes being levied on traders would not go to the government coffers. These traders also have been paying a handsome amount of money as revenue to the government, in case that channel is disrupted then it would hamper the collections to some extent."

( With inputs from ANI )