For the second time since August, the government of Pakistan has banned all gold imports into the country for 30 days, and for one of the same reasons India has placed draconian restrictions on gold imports itself.
Pakistan is being used by gold smugglers as a staging ground for getting the yellow metal into India, where prices are $130 per ounce higher, and a 10% import duty is charged. The flood of gold into Pakistan for nefarious purposes has caused a local shortage of dollars, which is wreaking havoc on the rupee/dollar exchange rate. This is enticing speculators to enter the currency market for Pakistani rupees, making the problem worse. India’s currency had the same problems before import restrictions were put into place.
Pakistani officials cite figures showing that 4,000 kg of gold was imported into the country in the last six months, but only 1000 kg has been made into jewelry and exported. Gold imports to Pakistan are usually relatively small, and used in the hand-made jewelry business. Officials stress that exports are not affected, but a spokesman for the jewelry industry said that restrictions put into place after the previous 30-day ban in August has severely affected the sector.
Since August, only 25 kg of precious metals can be imported by an individual on a rotating basis, and all of it must be marked for export jewelry fabrication. Every import must be documented by Pakistani consulate officials in the country the metal is being imported from, and it must be made into jewelry and exported within 120 days before any more can be imported.