By Dipesh Ghimire
Gold Imports Skyrocket by 580% in Four Months; Duty Cut, Festive Demand and Speculation Drive Surge
Nepal has recorded an extraordinary rise in gold imports during the first four months of the current fiscal year 2082/83, with imports soaring by 580 percent compared to the same period last year. Recent data from the Department of Customs shows a significant shift in both consumer behavior and cross-border gold commerce, signaling deeper economic implications for the country’s external sector.
Sharp Rise in Import Volume and Revenue
From Shrawan to Kartik of last fiscal year, Nepal imported 132 kilograms of gold, generating Rs. 28.55 crore in customs revenue.
In sharp contrast, the same period this fiscal year saw imports jump to 902 kilograms, producing Rs. 1.57 billion in revenue.
This drastic rise has increased Nepal’s spending on gold imports from Rs. 1.42 billion last year to Rs. 15.72 billion this year—an almost eleven-fold increase.
Analysts say such a large outflow of foreign currency could exert additional pressure on Nepal’s balance of payments and forex reserves if the trend persists.
Kartik Accounts for One-Third of Imports; Asoj Leads the Surge
Customs data shows that 300 kilograms, or nearly one-third of the total four-month import volume, arrived in Kartik alone.
However, Asoj remains the month with the highest import volume, recording 400 kilograms, mostly driven by festive demand during Dashain and Tihar.
Two major developments contributed to this spike:
1. Quota Expansion by Nepal Rastra Bank
At the end of Asoj, the central bank increased the daily gold import quota to 25 kilograms, immediately accelerating import volumes in Kartik.
2. Pre-Festive Purchasing
Jewelry retailers and wholesalers typically increase stock ahead of major festivals. This year’s demand appears to have been much stronger than usual.
Shrawan and Bhadra had moderate imports at 100 kilograms each, indicating a steady build-up before the sharp rise during Asoj and Kartik.
Prices Jump by Rs. 58,000 in 50 Days — Yet Demand Stays High
Despite a sharp rise in domestic prices, consumption remained unexpectedly strong.
The price of gold, which hovered around Rs. 200,000 per tola on Bhadra 11, climbed to Rs. 258,000 by Asoj 31—an increase of Rs. 58,000 within just 50 days.
Normally, such a sharp price jump slows down demand.
But in Nepal, the opposite happened.
Two Major Factors Behind the Unusual Import Surge
1. Customs Duty Cut Made Nepali Gold Cheaper Than India’s
The government reduced gold import duty from 20% to 10% from Mangsir last year.
This led to two major outcomes:
Gold became Rs. 15,000 per tola cheaper in Nepal.
Consumers living near the Indian border stopped going to India to buy gold.
Instead, they began purchasing from Nepali markets.
This shift alone significantly boosted domestic demand and import volumes.
2. Speculation That Prices Might Hit 3, 4, or Even 5 Lakhs
The rapid rise in prices triggered widespread speculation that gold could soon reach:
Rs. 300,000 per tola
Rs. 400,000 per tola
Rs. 500,000 per tola
Such rumors fueled both panic buying and aggressive stockpiling:
Consumers bought gold to “secure lower prices” before further hikes.
Traders imported more gold expecting a major price boom.
This cycle of speculation and demand further intensified import levels.
Interpretation: What Does This Trend Mean for Nepal’s Economy?
1. Higher Pressure on Foreign Exchange Reserves
With gold imports reaching Rs. 15.72 billion in four months, Nepal’s forex reserves face rising pressure, especially given the country’s existing reliance on remittance.
2. Increased Market Speculation
The price-driven surge reflects a speculative pattern in the Nepali gold market.
Such speculation-driven imports can destabilize both the jewelry industry and financial markets.
3. Policy Impact is Clearly Visible
The reduction in customs duty achieved its goal of increasing formal imports and discouraging illegal cross-border inflows.
However, it has also boosted overall gold consumption, which may not be beneficial for the macroeconomy.
4. Potential Risk of a Price Correction
If global prices stabilize or fall, traders who stocked gold at high prices may face losses, potentially impacting market liquidity.
Nepal’s gold imports have reached a historic high due to a combination of lower customs duty, festive demand, rising prices, and speculation in the market. While the surge has increased government revenue, it has also heightened pressure on forex reserves and raised concerns about speculative market behavior.
Economists warn that if the trend continues, Nepal Rastra Bank may need to revisit its gold import policies to protect the country’s external financial stability.
