Gold tumbles by Rs 800 as RBI eases import curbs
The easing of some gold import rules by the Reserve Bank of India (RBI) has resulted in a spike in share prices of Titan Company and other jewellery firms such as PC Jeweller, Gitanjali Gems and Tribhovandas Bhimji Zaveri (TBZ).business Updated: May 22, 2014 22:43 IST
The easing of some gold import rules by the Reserve Bank of India (RBI) has resulted in a spike in share prices of Titan Company and other jewellery firms such as PC Jeweller, Gitanjali Gems and Tribhovandas Bhimji Zaveri (TBZ).
Shares of PC Jeweller, TBZ and Thangamayil Jewellery hit the 20% upper circuit on the Bombay Stock Exchange. Titan closed up 7%, Rajesh Exports rose 11% and Gitanjali Gems gained 12%.
The RBI has now allowed “star” and “premier” trading houses to import gold. This is in addition to the permission already granted to banks to procure the yellow metal.
Star trading houses are big operators who usually import gold on a consignment basis or against loan on behalf of their clients.
Last year, the RBI and the government announced a slew of measures to curtail gold imports in order to reign in the high current account deficit — the gap between the inflows and outflows of a foreign currency. The central bank had allowed five more banks to import gold under the 20:80 scheme according to which 20% of all the gold that is imported has to be exported.
“Star trading houses/premier trading houses, which are registered as nominated agencies by the Director General of Foreign Trade, may now import gold under 20:80 scheme,” the Reserve Bank had said in a notification released late on Wednesday.
Analysts said the move will help increase supply of the precious metal in the domestic market and may also lead to softening of gold prices.
“This is a welcome development and a phased approach to eventual removal of curbs is expected to increase official supplies as a larger spectrum of players with an import entitlement now re-enter the market,” said PR Somasundaram, managing director, India, World Gold Council.