High global prices and a lower demand on the back of a weaker rupee are expected to cause demand in India to fall by nearly two thirds MUMBAI (REUTERS) - India's gold imports are set to slump by nearly two-thirds in 2009 as high global prices and a weaker rupee dent demand in the world's biggest consuming market, a senior official at a trade body said on Thursday. "Imports may fall to 250 tonnes as there has been continuous rise in prices, and also due to rupee depreciation," Anjani Sinha, president of Indian Bullion Market Association (IBMA), which represents about 10,000 jewellers across the country. Domestic gold prices hit a record high of 16,040 rupees ($328) per 10 gm on Feb. 20 when safe-haven buying amid the global financial turmoil reached a frenzy. They have since eased to about 15,600 rupees, but are still up 14 percent this year. India had imported 675 tonnes of gold in 2008, data from the World Gold Council showed. With dollar-denominated gold trading at around $950 an ounce, up 12% since the close of 2008, a weaker rupee has made imports more expensive. The rupee has bounced back from a record low of 52.2 per dollar in early March to 48.95, but is down 0.5% on the year. "If prices stay where they are, we might see at least 300 tonnes of scrap coming into the domestic market," Sinha said ahead of a gold convention in Goa on Sept. 4. Households in India are estimated to have 20,000 tonnes of scrap gold, and high domestic prices could bring about 200 tonnes to the market, he said. The IBMA also offers spot deliverable contracts for gold coins at four locations and plans to expand to 100 centres within one year, Sinha said. "We created this exchange to provide a linkage to the household scrap to refiners and bring them to the electronic platform," he said. He said IBMA was also aiming to have an Indian benchmark price for gold, and sell 100,000 coins a year. Currently, only post offices, banks and state-run agencies sell gold coins. According to the World Gold Council, India's demand for bars and coins fell by 12% to 190.5 tonnes in 2008. ($1 = 48.9 rupees) (Editing by Ranjit Gangadharan) © Thomson Reuters 2009 All rights reserved

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