KATHMANDU, August 16: The foreign currency reserve with the country declined by 13.1 percent to Rs 1.215 trillion in the last fiscal year.
According to an annual report on ‘Current Macroeconomic and Financial Situation of Nepal’ unveiled by Nepal Rastra Bank (NRB) on Tuesday, the country faced a net drain out of foreign currency worth Rs 183.23 billion in the past one year. As of mid-July 2021, Nepal had foreign currency reserves of Rs 1.399 trillion.
In terms of the US dollar terms, the foreign exchange reserves declined 18.9 percent to USD 9.54 billion. According to the NRB, the foreign currency reserves can finance the country’s imports of goods and services for the next 6.9 months.
A decline in the foreign currency reserves has been attributed largely to an adverse current account balance backed by widened trade deficit and slow growth of remittance inflows. During the review period, the country’s total trade deficit ballooned by 23 percent to Rs 1.720 trillion. Similarly, remittance inflows grew by mere 4.8 percent to Rs 1.007 trillion, compared to a growth of 9.8 percent in the previous fiscal year.
Likewise, capital transfer decreased by 34.5 percent to Rs 9.99 billion while the net foreign direct investment decreased by 4.9 percent to Rs 18.56 billion.