KATHMANDU, Feb 16: Nepal bought Indian rupees worth Rs 241.31 billion by selling US dollars to finance the imports from the southern neighbour during the first six months of the fiscal year compared to that of Rs 229.55 billion in the same period in the last fiscal year.
According to Nepal Rastra Bank (NRB), the country spent US $2.04 billion to purchase the aforementioned amount of Indian rupees during a period of mid-July last year and mid-January this year. For the purpose, a total of $2.02 billion was offloaded in the review period last year.
Almost every year, the country has to spend a large amount of US dollars to purchase the Indian currency due to the ever increasing import volume from the southern neighbor, many of which are luxury items.
Nepal now has a cushion of foreign currency with a balance of payments surplus of Rs 124.92 billion, that will be sufficient to fund imports of goods and services for more than 12 months. Of the total earnings, a large chunk of the US dollars is received through remittance while the earnings of the foreign currency from tourism income and foreign direct investment are very low.
During the review period, the country’s overall trade deficit declined by 5.8 percent to Rs 600.45 billion, however, the government authorities had a hard time managing the Indian currency due to the soaring import expenses. According to the Trade and Export Promotion Center, Nepal’s import expense to India increased by 3.5 percent to Rs 438.83 billion compared to a growth of 8.4 percent in export earnings from the southern neighbor, which stood at mere Rs 43.5 billion.