KATHMANDU, Nov 20: Nepal’s foreign currency reserves reached Rs 2.232 trillion as of mid-October, with a notable increase of 9.4 percent in the first three months of the current fiscal year.
In terms of the US dollar, the foreign currency reserves stood at 16.60 billion, according to the latest report of Nepal Rastra Bank (NRB).
The Current Macroeconomic and Financial Situation Report published by the central bank on Tuesday shows that the amount increased by 8.7 percent from US $15.27 billion as of the end of the fiscal year 2023/24.
Nepal’s foreign currency reserves reach closer to Rs 2 trillion
Based on the imports in the first quarter of the current fiscal year, the existing foreign exchange reserves will be sufficient to cover the prospective merchandise imports for 17.6 months, and merchandise and services imports of 14.6 months. The ratio of reserves to the country’s GDP has reached 39.1 percent.
According to economists, an increase in foreign currency reserves provides a cushion to the import-based economy of countries like Nepal. The landlocked country maintains an adequate supply of its majority of consumer goods including food items and equipment for its development projects via imports. “It might also help in the inflow of foreign direct investment, as it boosts the confidence of investors,” said Gunakar Bhatta, executive officer of the NRB.
The NRB report shows that the surge in foreign currency reserves was the outcome in financial inflows caused by an increased surplus of the country’s current account balance, which includes remittance and trade balance. In the review period, the remittance inflow increased 11.5 percent to Rs 407.31 billion. In terms of the US Dollar, remittance inflow increased 10.14 percent to 3.04 billion.
Likewise, imports declined by 4.2 percent to Rs 390.75 billion. The merchandise exports also decreased 6.1 percent to 38.38 billion. The current account remained at a surplus of Rs 111.87 billion, up from Rs 59.65 billion last year.
Meanwhile, the country’s net capital transfer also grew to Rs 2 billion from Rs 1.15 billion. The inflow of foreign direct investment increased to Rs 4.81 billion from Rs 3.38 billion.
Overall, the country’s balance of payments (BoP) remained at a surplus of Rs 184.99 billion against a surplus of Rs 101.66 billion in the corresponding period last year. In terms of the US Dollar, the BoP surplus rose to 1.38 billion against a surplus of 766.80 million last year.
