MONEY»
Remittance, import cuts boost reserves
KATHMANDU, AUG 31 -
Foreign exchange reserves have soared over the last few months as a result of tightened imports and increased remittance inflow.
Foreign currency reserves grew to US$ 3.06 billion in dollar terms excluding Indian currency during the first week of August compared to US$ 2.97 billion about four months ago, said Nepal Rastra Bank. The reserve of Indian rupees was worth Rs. 25 billion.
“Reserves had remained at around US$ 2.97 billion till the end of the last fiscal year when they reached US$ 3 billion,” said a senior official of NRB. However, appreciation of the Nepali rupee against the US dollar has reduced the foreign exchange reserves in terms of Nepali currency by Rs. 2 billon lately.
Foreign exchange reserves dropped to Rs. 266 billion in the first week of August from Rs. 288 billion in mid-July, said the central bank. However, reserves continued to grow from mid-April even in Nepali currency terms until the end of the last fiscal year. Foreign currency reserves were at their lowest in mid-April when they had fallen to Rs. 235.75 billion.
“Current reserves are sufficient to pay for imports of both merchandise and services for seven to eight months,” said the NRB official. “This is a comfortable position.”
NRB officials said that the recent increase in remittance following gloomy growth during the last few months combined with import restrictions on gold and silver contributed to a gradual improvement in foreign exchange reserves.
According to NRB, remittance grew by 17 percent in the last fiscal year as a whole, although the growth rate had dipped to 6.6 percent in the first four months of the last fiscal year compared to 65.9 percent during the same period in the previous year. With exports dwindling, remittance is now the biggest source of foreign exchange for Nepal.
The balance of payments deficit has eased notwithstanding the fall in exports thanks to improved remittance and import restrictions on some goods. The central bank said that the deficit, which had reached a high of Rs. 23.53 billion in mid-March, was likely to drop to Rs. 5 billion as of the end of the last fiscal year.
The monetary policy has planned to contain the balance of payments deficit at Rs. 9 billion during the current fiscal year.
Posted on: 2010-09-01 08:27
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