The value of India’s gold imports declined by a quarter on an annual basis during the first quarter of the 2018–2019 fiscal year amid lackluster metal prices both on local and global scales.
The Economic Times reported that the value of the country’s inbound shipments of the yellow metal was pegged at $8.43 billion in the April to June period of this year, lower by 25 percent from the $11.26 billion logged in the same quarter in the previous fiscal year. A fiscal year in India for the sector runs from April to March of the next year.
On a calendar basis, the volume of imports of the metal in the first half of this year received a 38 percent drop from a year ago, recording 318.2 tons, Reuters reported.
“In the first half of June retail purchases were weak due to Adhik Maas,” said MNC Bullion director Daman Prakash Rathod. Adhik Maas is an additional month in the Hindu calendar that concludes every June 13. This period is viewed as a time for prayer and fasting, so people avoid weddings or purchasing gold or real estate as much as possible.
Such an event does not sit well in boosting India’s gold imports, which could reach 700 to 800 tons per annum and is meant mainly to fulfill the demand from the jewelry industry. The South Asian country’s outbound shipments of gems and jewelry in June earned a 3 percent increase to $3.5 billion.
Meanwhile, for June alone, shipments declined for a sixth consecutive month. Last month saw gold imports stand at 44 tons, 25 percent down from 58.9 tons in June 2017.
The smaller volume during the month was attributed to the rupee’s plunge to a record low in the last week of June, shedding almost 8 percent so far this year. This plummet, in turn, buoyed local prices to a near 21-month high during the period, although putting year-to-date levels rising by a meager 5 percent.
“The rupee kept local prices elevated despite the correction in global prices,” the chief of a Mumbai bullion importing bank’s gold trading desk was quoted.
A cut on imports by the world’s second top buyer of the metal could also help India contain its current account deficit (CAD), which is the surplus between the imports and exports of a currency.
During the previous fiscal year, the CAD increased more than threefold to $48.7 billion — corresponding to 1.9 percent of GDP — from $14.4 billion, which represents 0.6 percent of the national economy during the prior fiscal year. However, the burgeoning prices of oil, compounded by the depreciating rupee and capital outflow, are raising concerns that the CAD will rise this fiscal year.
For this July, the country’s gold imports are projected to grow 55 tons as the industry is anticipated to refill gold stocks after six consecutive months of buying the metal at a minimum volume.
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