Concerned at pressure on the country’s forex reserves, Nepal government has put a ban on import of gold.
The move came into effect from Friday in order to protect the foreign currency reserves under pressure due to steep rise in import of the yellow metal.
“The decision will remain in effect till further notice,” Ganesh Dhakal, joint secretary at ministry of commerce and supplies was quoted by local media.
The decision was taken following a request from Nepal’s central bank as despite controlling the supply of gold available in the market, gold import has hurt the foreign currency reserves.
Nepal Rashtra Bank limits supply of gold to 10 kilograms daily. But flow of forex due to gold import has nearly trebled to NRs 39.4 billion in the past one year in comparison to last year.
The ministry stated that Nepal has enough forex to finance merchandise export for another eight months. But the ban was imposed in order to check outflow of forex due to gold import.
Nepal is facing a large trade deficit due to sharp rise in import and decreased exports.
In view of the coming festival season, gold is in very high demand and the ban might lead to sharp rise in prices and smuggling from across the border.
On Thursday, 4.29 kg of gold worth NRs 13 million was seized by police at Birgunj in the Indo-Nepal border as it was being smuggled into Nepal in a car.