NRB turns flexible on threshold for foreign currency use after notable gains in forex

Published On: December 29, 2023 09:15 AM NPT By: Republica | @RepublicaNepal

Central bank relaxes foreign currency limit for migrant workers bound for specified countries

KATHMANDU, Dec 29: Nepal Rastra Bank (NRB) has increased the limit of foreign currency migrant workers bound for a number of European countries and the US can carry to USD 500 from the existing USD 200.

Issuing a directive on Thursday, the country’s central bank has extended the foreign currency limit for the specified countries. The extended facility will be applied to countries including Japan, South Korea, Europe, the USA and Canada.

However, the limit has been left unchanged for migrant workers bound for other countries including Malaysia and the Middle East, among others. The NRB has also increased the foreign currency amount for payment of the academic institutes affiliated to foreign universities to USD 12,000 from USD 10,000.

Meanwhile, the NRB has increased the limit for the inflows of remittance as receipt from selling goods and services from abroad to Rs 2 million from Rs 1.5 million on a daily basis. The deadline for receiving income from abroad has been increased from 15 days to 30 days.

In the revised rule, the companies registered in Nepal can receive sales receipt, commissions and remunerations worth within the revised threshold. The companies concerned will have to submit their monthly financial report to the NRB within a week from the end of the corresponding month.

The central bank has turned flexible in allowing the use of foreign currency after the country has an adequate amount of foreign currency reserves with an improvement in the balance of payments (BoP). The country’s BoP surplus jumped more than seven folds in the past year. As of mid-November 2022, the country’s positive balance in the BoP stood at Rs 20.03 billion. In the US dollar terms, the BoP remained at a surplus of 1.11 billion in the review period against a surplus of 149.6 million in the same period of the previous year.

The total foreign exchange reserve, which was worth Rs 1.539 trillion in mid-July, surged by 10.2 per cent to reach Rs 1.696 trillion in mid-November.

According to the NRB, foreign exchange reserves in US dollars have risen by 8.9 per cent, reaching USD 12.75 billion in mid-November, compared to USD 11.71 billion in mid-July. The amount is sufficient to finance merchandise imports of 13.6 months and merchandise and services imports of 11.3 months.