Nepal’s foreign exchange holdings increases

KATHMANDU: Due to soaring remittance earnings, Nepal’s foreign exchange reserves rose to their highest level in two years, totaling Rs 1.421 trillion.

Nepal’s foreign exchange reserves recovered to the aforementioned level as of mid-March this year, according to the “Current Macroeconomic and Financial Situation Report of Nepal” released by Nepal Rastra Bank (NRB). Nepal’s foreign exchange reserves peaked in April 2021 at Rs 1.433 trillion, before falling as low as Rs 1.146 billion. .

The government placed restrictions on the import of 10 opulent goods following a significant decline in foreign currency reserves. Similar to this, NRB continued to mandate a cash margin of up to 100% on the import of numerous products.

The government’s initiatives assisted in restoring the foreign exchange reserves that had previously declined, allowing the nation to finance imports for only about six months. The NRB estimates that the current level of foreign exchange reserves is enough to cover imports of goods and services for nine and a half months. .

The significant decline in imports and the increase in remittance earnings are to blame for the increase in foreign currency reserves. Imports fell 191% during the review period while remittance inflows rose 253%.