KATHMANDU, May 12: Despite massive efforts made by the government to check financial outflows, the country’s foreign currency reserves increased by nominal amounts in the past one month from mid-March to mid-April.
According to the nine months’ macroeconomic report of Nepal Rastra Bank (NRB), the foreign currency reserves with the country stood at US $ 9.61 billion, an increase of USD 30 million compared to that of the previous month as of mid-April. Despite a rise in foreign currency reserves, Nepal’s ability to import merchandise and services declined from 6.7 months to 6.6 months based on the whopping surge in imports and increased prices of goods and services abroad.
Citing depleting foreign currency reserves, the government has restricted imports of a number of luxury goods and non-essential items. Similarly, the government has tightened the conditions for issuing letter of credits by banks while the ceiling of carrying foreign currencies by individuals traveling abroad has also been reduced.
With strict government measures in place, the rate of decline in the foreign exchange reserves, however, slowed in the ninth month of the current fiscal year. The NRB report shows that the reserves fell by 18.2 percent (in US dollar terms) as of mid-April, compared to a decline of 18.5 percent recorded as of mid-March this year.
During the review period, Nepal’s current account remained at a deficit of Rs 512.71 billion. The balance of payment, which measures the net financial inflow and outflow of a country, stood at a deficit of Rs 268.26 billion.