Foreign exchange reserves above 15 billion: NRB

Kathmandu: The gross foreign exchange reserves increased 7.4 per cent to Rs 1506.06 billion in mid-November 2020 from Rs1401.84 billion in mid-July 2020.

This is stated in the Current Macroeconomic and Financial Situation Report based on four months’ data ending Mid-November, 2020/21, the Nepal Rastra Bank (NRB) published on Monday.

In the US Dollar terms, the gross foreign exchange reserves increased 8.6 per cent to 12.65 billion in mid-November 2020 from 11.65 billion in mid-July 2020. 22.

Of the total foreign exchange reserves, reserves held by NRB increased 8.6 per cent to Rs.1332.06 billion in mid-November 2020 from Rs.1226.12 billion in mid-July 2020. Reserves held by banks and financial institutions (except NRB) decreased 1.0 per cent to Rs.173.99 billion in mid-November 2020 from Rs.175.71 billion in mid-July 2020. The share of Indian currency in total reserves stood at 23.2 per cent in mid-November 2020.

Foreign Exchange Adequacy Indicators
Based on the imports of four months of 2020/21, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 15.4 months, and merchandise and services imports of 14.0 months, the Central Bank stated. The ratio of reserves-to-GDP, reserves-to-imports and reserves-toM2 stood at 40.0 per cent, 116.3 per cent and 33.4 per cent respectively in mid-November 2020. Such ratios were 37.2 per cent, 105.7 per cent and 33.1 per cent respectively in mid-July 2020.

Inflation
The y-o-y consumer price inflation stood at 4.05 per cent in the fourth month of 2020/21 compared to 5.76 per cent a year ago. Food and beverage inflation stood at 5.73 per cent whereas non-food and service inflation stood at 2.75 per cent in the review month. The price of vegetable sub-group rose 20.88 per cent and pulses and legumes sub-group rose 13.70 per cent on a y-o-y basis. In the review month, the Kathmandu Valley, Terai, Hill and Mountain witnessed 3.39 per cent, 4.69 per cent, 3.64 per cent and 4.32 per cent inflation respectively. These regions had witnessed 6.50 per cent, 6.04 per cent, 4.56 per cent and 4.01 per cent inflation respectively a year ago.

Similarly, the y-o-y wholesale price inflation stood at 9.41 per cent in the review month compared to 7.57 per cent a year ago. The y-o-y wholesale price of consumption goods, intermediate goods and capital goods increased by 7.72 per cent, 11.48 per cent and 3.45 per cent respectively. The wholesale price of construction materials dropped 0.19 per cent in the review month.

The y-o-y salary and wage rate index increased by 0.85 per cent in the review month. Such a growth rate was 10.46 per cent a year ago. In the review month, wage rate index increased 1.10 per cent.

The NRB stated that in four months of 2020/21, merchandise exports increased 10.8 per cent to Rs.40.20 billion compared to an increase of 23.9 per cent in the same period of the previous year. Destination-wise, exports to India and other countries increased by 14.9 per cent and 6.5 per cent respectively whereas exports to China decreased by 59.2 per cent.

Exports of cardamom, jute goods, polyester yarn and threads, noodles, and medicine (ayurvedic) among others increased whereas exports of palm oil, pulses, zinc sheet, handicrafts, and skin among others decreased in the review period.

In four months of 2020/21, merchandise imports decreased by 10.6 per cent to Rs.402.49 billion compared to a decrease of 6.9 per cent a year ago. Destination-wise, imports from India, China and other countries decreased by 3.1 per cent, 25.0 per cent, and 19.8 per cent respectively. Imports of rice, crude soyabean oil, telecommunication equipment and parts, edible oil, and medical equipment and parts among others increased whereas imports of petroleum products, aircraft spare parts, transport equipment and parts, crude palm oil and other machinery and parts among others decreased in the review period. 9. Based on customs points, exports from Dry Port, Tatopani, Kanchanpur and Rasuwa Customs Office decreased whereas exports from all the other customs points increased in the review period.

On the import side, imports from all the other customs points decreased except Bhairahawa, Biratnagar, Nepalgunj, Krishnanagar, and Kailali Customs Offices in the review period.

The total trade deficit narrowed down 12.5 per cent to Rs.362.29 billion in four months of 2020/21. Such deficit had contracted 8.9 per cent in the same period of the previous year. The export-import ratio increased to 10.0 per cent in the review period from 8.1 per cent in the same period of the previous year.

Remittances
Remittance inflows increased 11.2 per cent to Rs.337.72 billion in the review period against a decrease of 2.8 per cent in the same period of the previous year. In the US Dollar terms, remittance inflows increased 6.4 per cent to 2.85 billion in the review period against a decrease of 1.9 per cent in the same period of the previous year.

The number of Nepali workers (institutional and individual-new and legalized) taking approval for foreign employment decreased by 75.8 per cent to 19251 in the review period. It had increased by 5.6 per cent in the same period of the previous year. The number of Nepali workers (Renew entry) taking approval for foreign employment decreased by 67.9 per cent to 25931 in the review period. It had increased by 9.1 per cent in the same period of the previous year. Net transfer increased 8.8 per cent to Rs.373.04 billion in the review period. Such transfer had decreased by 2.9 per cent in the same period of the previous year.

Current Account and Balance of Payments
The current account remained at a surplus of Rs.20.46 billion in the review period against a deficit of Rs.34.12 billion in the same period of the previous year. In the US Dollar terms, the current account recorded a surplus of 170.8 million in the review period against a deficit of 300.8 million in the same period of the previous year.

In the review period, capital transfer decreased 9.3 per cent to Rs.4.15 billion and net foreign direct investment (FDI) decreased 23.9 per cent to Rs.3.75 billion. In the same period of the previous year, capital transfer and net FDI amounted to Rs.4.57 billion and Rs.4.92 billion respectively.

Balance of Payments (BOP) registered a surplus of Rs.110.65 billion in the review period. Such surplus was Rs.27.29 billion in the same period of the previous year. In the US Dollar terms, the BOP recorded a surplus of 931.7 million in the review period compared to a surplus of 240.8 million in the same period of the previous year.

Foreign Exchange Reserves
Gross foreign exchange reserves increased 7.4 per cent to Rs.1506.06 billion in mid-November 2020 from Rs.1401.84 billion in mid-July 2020. In the US Dollar terms, the gross foreign exchange reserves increased 8.6 per cent to 12.65 billion in mid-November 2020 from 11.65 billion in mid-July 2020. Of the total foreign exchange reserves, reserves held by NRB increased 8.6 per cent to Rs.1332.06 billion in mid-November 2020 from Rs.1226.12 billion in mid-July 2020. Reserves held by banks and financial institutions (except NRB) decreased 1.0 per cent to Rs.173.99 billion in mid-November 2020 from Rs.175.71 billion in mid-July 2020. The share of Indian currency in total reserves stood at 23.2 per cent in mid-November 2020.