KATHMANDU(BullionStreet): Nepal Gold and Silver Traders Association(Negosida) said high demand for Indian rupee remained the major reason behind the high increase in gold smuggling to India.

The Association said Nepalese importers have been using gold to make payments for goods being imported from India for the last three months, leading to shortage of the yellow metal despite recent hike in gold prices continued to hit gold markets in the country.

Indian Currency 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.

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

Nepal is highly dependent on India for import of foreign goods and it is estimated that three-fourth of Nepalese imports comes from India. Nowadays.

Nepal’s daily requirement is estimated at around 30 kg a day in December while 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.

Analysts said as the amount is half the domestic demand, local traders are illegally importing gold from Indian and Chinese markets to fulfill the domestic demands.