Foreign exchange reserves reach Rs. 1,912 bn, adequate for over one year's import

By A Staff Reporter,Kathmandu, May 13: There has been a further improvement in the external sector of the economy.

A steady improvement has been noticed in foreign currency reserves, balance of payment, current account and remittance inflows during the first nine months of the current fiscal year 2023/24.

According to the current macroeconomic and financial status report published by the Nepal Rastra Bank (NRB) Sunday, the foreign currency reserve of the first nine months of the current fiscal year can foot the import of goods and services for more than one year.

The foreign current reserves reached an all-time high of Rs. 1,911.86 billion during the first nine months of the current fiscal year.

Foreign currency reserves added about Rs. 39.04 billion during a single month (mid-March 2024 to mid-April 2024). The foreign currency reserve was Rs. 1,872.82 billion in mid-March 2024.

According to the NRB, the gross foreign exchange reserves increased by 24.2 per cent to Rs. 1,911.86 billion in mid-April 2024 from Rs. 1,539.36 billion in mid-July 2023. 

In the US dollar terms, the gross foreign exchange reserves increased by 22.7 per cent to 14.36 billion in mid-April 2024 from 11.71 billion in mid-July 2023. 

Of the total foreign exchange reserves, reserves held by NRB increased by 25.4 per cent to Rs. 1,688.21 billion in mid-April 2024 from Rs. 1,345.78 billion in mid-July 2023. 

Reserves held by banks and financial institutions (except NRB) increased by 15.5 per cent to Rs. 223.65 billion in mid-April 2024 from Rs. 193.59 billion in mid-July 2023. 

The share of Indian currency in total reserves stood at 21.6 per cent in mid-April 2024. The ratio of reserves-to-GDP, reserves-to-imports and reserves-to-M2 stood at 33.5 per cent, 104 per cent and 28.9 percent respectively in mid-April 2024.  Such ratios were 28.8 per cent, 83.0 per cent and 25 per cent respectively in mid-July 2023.

Remittance of Rs. 121 billion received in a single month

According to the report, remittance inflows increased by 19.8 per cent to Rs. 1,082.62 billion in the review period compared to an increase of 24.2 per cent in the same period of the previous year. 

In the US dollar terms, remittance inflows increased by 17.7 per cent to 8.15 billion in the review period compared to an increase of 13.9 per cent in the same period of the previous year.

The report showed that remittance of Rs. 121.4 billion has been received in a single month from mid-March 2024 to mid-April 2024 of the current fiscal year.

In the review period, the number of Nepali workers, both institutional and individual, taking first time approval for foreign employment recorded 329,422 and taking approval for renew entry recorded 212,721. In the previous year, such numbers were 387,839 and 217,959 respectively.

Net transfer increased by 17.8 per cent to Rs. 1174.50 billion in the review period. Such transfer had increased by 22.8 percent in the same period of the previous year.

Both exports, imports drop

During the review period, the country's import and export trade has decreased marginally. Merchandise exports decreased by 3.7 per cent to Rs. 113.95 billion compared to a decrease of 26.3 per cent in the same period of the previous year. 

Destination-wise, exports to India and other countries decreased by 6.2 per cent and 2 per cent respectively, whereas exports to China increased by 232 per cent. 

Exports of zinc sheet, particle board, juice, polyester yarn and thread, and readymade garments, among others, increased whereas exports of palm oil, soybean oil, woolen carpet, tea, jute items, among others, decreased, said the NRB.

Similarly, in the review period, merchandise imports decreased by 2.8 per cent to Rs. 1,167.37 billion compared to a decrease of 18.1 per cent a year ago. 

Destination-wise, imports from India and other countries decreased by 3.2 per cent and 22.6 per cent respectively while imports from China increased by 33.4 per cent. 

Imports of transport equipment, vehicle and other vehicle spare parts, readymade garments, aircraft spare parts, electrical equipment, textiles, among others, have increased whereas imports of gold, crude soybean oil, crude palm oil, petroleum products and rice/paddy, among others, have decreased.