In the same period a year ago, the imports stood at just Rs 2.6 billion, while the imports for the whole last year was at Rs 12.71 billion, , according to Nepal Rastra Bank (NRB) statistics.

Surprised by the surge in imports at a time when the exports of Nepali silver jewellery has dwindled, bullion traders suspect rising smuggling of the metal to India. The exports of silver jewellery decreased 13.6 percent to Rs 92.4 million in the first quarter.

They, however, said the falling prices of the precious metal has also fuelled domestic consumption. The price has tumbled 23 percent over the last year. The metal was traded at Rs 685 per tola on Sunday.

“Such a surge in the import is unusual at a time when exports have decreased,” said Mani Ratna Shakya, president of Federation of Nepal Gold and Silver Dealers Association (Fenegosida). “Smuggling to India to obtain Indian currency might be a reason behind the surge in silver imports.”

The central bank allows commercial banks to import just 15 kg gold per day, but there is no such quantitative restriction on silver import. “The gold import curbs may have encouraged people to import silver,” said Shakya, highlighting the need for imposing such restriction on silver imports too.

The association estimates daily silver demand at 200 kg in normal times and up to 400kg a day during the festival season.

Traders say people were also purchasing silver for investment purpose amid falling prices. “Small-scale investors are putting money in silver when the price is on the lower side,” said Tej Ratna Shakya, owner of Tejmin Jewellery. “As the margin on gold is very low these days, traders are also focusing on silver jewellery.”

He also attributed the surge in imports to increasing trend of using the metal for household purposes such as crockery and handicrafts. “As the demand surges during festivals like Dashain and Tihar, many traders imported a massive amount of silver,” he said. Gold imports, however, dipped 82.2 percent to Rs 633.6 million in the first quarter from Rs 3.5 billion last year.