KATHMANDU, April 12: Nepal’s foreign currency reserves reached a two years’ high of Rs 1.421 trillion on the back of soaring remittance earnings.
According to the ‘Current Macroeconomic and Financial Situation Report of Nepal’ unveiled by Nepal Rastra Bank (NRB), Nepal's foreign currency reserves bounced back to the aforementioned level as of mid-March this year. In April 2021, Nepal had the foreign exchange reserves of Rs 1.433 trillion, which later on declined to as low as Rs 1.146 billion.
Nepal bans import of luxury items amid depleting forex reserves
After a notable fall in foreign currency reserves, the government imposed restrictions on the import of 10 luxurious goods. Similarly, NRB maintained a mandatory provision of up to 100 percent cash margin on import of numerous products.
The government policies helped to bounce back the foreign currency reserves that once fell to finance the country to import goods for only around six months. According to NRB, the existing amount of foreign currency reserves is sufficient to cover imports of goods and services for 9.4 months.
The recovery in the foreign currency reserves is due to the notable fall in imports and a rise in remittance earnings. During the review period, imports declined 19.1 percent, while remittance inflows increased 25.3 percent.
