KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
The Nepal Stock Exchange (NEPSE) Index suffered a sharp decline of 3.20%, closing at 2,739.46 points amid a turbulent trading session marked by significant volatility and high trading activity, with a turnover of Rs. 12.92 billion.
Concurrently, Nepal Rastra Bank (NRB) has shifted its strategy for the Dashain festival from issuing new banknotes to circulating clean, used notes to reduce costs, reflecting a broader move towards digital transactions.
In the precious metals market, gold prices remained stable while silver prices fell by Rs. 20, indicating diverging market trends. NRB also plans to withdraw an additional Rs. 40 billion from the banking system to manage liquidity, emphasizing its ongoing efforts to stabilize the financial sector.
Meanwhile, Minister Deepak Khadka reaffirmed the government’s commitment to completing ADB-supported projects, underscoring a focus on maintaining international development partnerships.
NEPSE Index plummets 3.20% amid volatile trading session
The Nepal Stock Exchange (NEPSE) Index experienced a significant decline of 90.73 points, or 3.20%, closing at 2,739.46 points.
This downturn comes after a modest rise of 6.90 points in the previous trading session, which ended at 2,830.16 points.
Today, the index opened at 2,860.07 points and demonstrated considerable volatility, peaking at 2,860.39 points and dipping to a low of 2,732.40 points before closing at its final level.
The trading session was marked by high activity, with 320 stocks traded across 137,163 transactions. The total volume of shares exchanged was 26,584,192, generating a turnover of Rs. 12.92 billion.
Market capitalization stood at Rs. 4.35 trillion, with the float market capitalization at Rs. 1.53 trillion, reflecting the day’s robust trading environment amidst the significant drop in the index.
Nepal Rastra Bank shifts to clean notes only for Dashain
In a significant departure from its annual tradition, Nepal Rastra Bank (NRB) will not issue new banknotes for the Dashain festival this year, opting instead to circulate only clean, previously used notes.
This change is driven by the bank’s strategic decision to manage costs more effectively, as it aims to reduce the substantial expenditure associated with printing new currency.
Historically, NRB has distributed fresh notes in denominations of 5, 10, 20, 50, and 100 rupees during Dashain and Tihar, but in light of an average annual cost of approximately 1.3 billion rupees for new note production over the past five years, the bank is shifting its focus towards encouraging digital transactions and cutting down on printing expenses.
Gold prices hold steady while silver drops by Rs 20 in domestic market
On Wednesday, gold prices in the domestic market remained static, with no movement from the previous day’s rates.
The Federation of Nepal Gold and Silver Dealers’ Associations confirmed that fine gold was priced at Rs 152,100 per tola, maintaining its position from the prior day.
This stability in gold prices suggests a period of equilibrium in the market, reflecting consistent demand and supply dynamics. However, the price of silver did experience a reduction, falling by Rs 20 to Rs 1,755 per tola.
This decline indicates a shift in the silver market, potentially driven by varying factors such as fluctuating industrial demand or market sentiment.
The contrast between the stable gold prices and the decreasing silver prices highlights divergent trends within the precious metals sector, signaling different underlying economic pressures affecting each metal.
NRB to extract additional Rs 40 billion from banking system
Nepal Rastra Bank (NRB) has announced plans to withdraw an additional Rs 40 billion from the banking system to manage liquidity.
This will be achieved through a 21-day bidding process. Banks and financial institutions must submit their proposals by 3 PM on Wednesday.
Notably, Rs 121 billion previously absorbed by the central bank remains outstanding and has not yet matured.
This move underscores NRB’s ongoing efforts to regulate liquidity levels within the financial sector amidst the backdrop of substantial funds still tied up from earlier operations.
Minister Khadka reaffirms commitment to ADB-supported projects
Minister for Energy, Water Resources, and Irrigation Deepak Khadka reaffirmed the government’s commitment to the prompt completion of projects supported by the Asian Development Bank (ADB) in Nepal.
He assured that any issues arising during the implementation of these projects would be addressed swiftly.
In a meeting with Arnaud Cauchois, ADB’s Country Director for Nepal, held today at the Ministry of Energy, Water Resources, and Irrigation in Singha Durbar, Minister Khadka expressed gratitude for ADB’s support in developing Nepal’s energy sector.
Forex: Minor fluctuations for major currencies
The The Nepal Rastra Bank updated its foreign exchange rates for Thursday. The US dollar’s buying rate is 134.05 rupees and selling rate is 134.65 rupees, slightly lower than yesterday’s rates.
The Euro’s buying rate is 148.16 rupees and selling rate is 148.82 rupees, also showing minor changes. For the British pound, today’s rates are 175.80 rupees for buying and 176.59 rupees for selling.
The Australian dollar is priced at 90.09 rupees for buying and 90.49 rupees for selling.
The Saudi Arabian riyal, Qatari riyal, and UAE dirham rates remain unchanged from yesterday at 35.72/35.88 rupees, 36.78/36.94 rupees, and 36.50/36.66 rupees, respectively.
(Prepared by Srija Khanal)
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