Nepal gains a significant amount of foreign currency reserves due to a whopping rise in remittance inflows
KATHMANDU, Jan 12 : Nepal has attained an all-time high record of foreign currency reserves of US $ 13.31 billion, mainly due to a whopping rise in remittance inflows in the past few months.
Nepal Rastra Bank (NRB)’s report on ‘Current Macroeconomic and Financial Situation of Nepal’ shows that the foreign currency reserves as of mid-December soared 13.6 percent in the past five months of the current fiscal year. In monetary measures, the landlocked country got an additional net amount of foreign currencies worth USD 1.6 billion in the review period.
Nepal bans import of luxury items amid depleting forex reserves
In terms of the Nepali currency, the country had a total foreign currency reserve of Rs 1.767 trillion as of mid-December. This was an increase from Rs 1.539 trillion in mid-July, while the data shows a growth of Rs 122 billion just in the past one month.
According to economists, an increase in foreign currency reserves provides a cushion to import-based countries like Nepal. The landlocked country maintains an adequate supply of its majority of consumer goods including food items and equipment for its development projects via imports.
The notable rise in foreign currency reserves has been attributed to a whopping rise in the remittance inflows during the review period. According to the NRB records, remittance inflows increased 27.6 percent to Rs 613.25 billion in the review period compared to an increase of 23 percent in the same period of the previous year.
In the US Dollar terms, remittance inflows increased 24.5 percent to 4.62 billion in the review period compared to an increase of 13.1 percent in the review period last year.
During mid-July and mid-December, a total of 277,592 persons took approval for foreign employment. These include 173,555 individuals receiving government approval for the first time, while 104,037 individuals got renewal for their entry in foreign companies of their employment destinations.
In the review period, imports declined by 3.4 percent to Rs 642.21 billion. On the other hand, net transfer increased 26.3 percent to Rs 669.74 billion.
As a result of the positive growth of net transfer and a fall in imports, the country’s current account remained at a surplus of Rs.140.23 billion in the review period. The current account stood at a deficit of Rs 41.21 billion in the same period last year.
Likewise, the balance of payments (BoP) remained at a surplus of Rs 210.59 billion against a surplus of Rs 45.87 billion in the review period last year. In terms of the US Dollar, the BoP surplus stood at 1.58 billion against a surplus of 346.8 million last year.
