Nepal’s foreign currency reserves reach closer to Rs 2 trillion

Published On: June 11, 2024 10:25 AM NPT By: Republica | @RepublicaNepal

Nepal added extra forex worth Rs 31.4 billion last month while the earning in the first ten months was Rs 403.04 billion

KATHMANDU, June 11: Nepal’s foreign currency reserves climbed to Rs 1.942 trillion as of mid-May this year, mainly due to a whopping rise in the inflow of remittances.

The Current Macroeconomic and Financial Situation Report of the country unveiled by Nepal Rastra Bank (NRB) on Monday shows that the country accumulated additional foreign currencies worth Rs 403.04 billion in the first ten months of the current fiscal year. In mid-July 2023, the amount stood at 1.539 trillion.

In terms of the US dollar, the gross foreign exchange reserves increased by 24.2 percent to 14.54 billion in mid-May 2024 from 11.71 billion in mid-July 2023. The amount is sufficient to support merchandise imports for 15.1 months, and merchandise and services imports for 12.6 months.

NRB attributes ths increase in foreign currency reserves to a surge in the remittance amount along with a decline in the import expenses of the country. Remittance inflows increased by 19.2 percent to Rs 1.198 trillion in the first 10 months compared to an increase of 23.4 percent in the same period of the previous year.

Likewise, the merchandise imports declined by 2.4 percent to Rs 1.303 trillion. Destination-wise, imports from India and other countries decreased by 3.4 percent and 20.8 percent respectively, while imports from China increased by 34.4 percent. Imports of crude soybean oil, gold, hot rolled sheet in coil, crude palm oil and rice/paddy dropped during the review period.

The current account remained at a surplus of Rs 193.25 billion compared to a deficit of Rs 63.74 billion in the corresponding period of last FY. The capital transfer however decreased by 17.2 percent to Rs 5.26 billion and net foreign direct investment remained at a positive of Rs 6.98 billion.

Consumer price inflation moderated to 4.4 percent last month

The year-on-year consumer price inflation moderated to 4.4 percent in mid-May 2024, compared to 7.41 percent a year ago.

According to a report of the NRB, price inflation of food and beverage category stood at 6.27 percent whereas non-food and service category inflation stood at 2.96 percent in the review month.

Under the Food and Beverage Category, the price index of vegetable sub-category increased by 23.11 percent, pulses and legumes by 10.85 percent, spices by 8.98 percent, cereal grains and their products by 7.42 percent and sugar and sugar products by 7.25 percent in the review month.