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) saw a modest rise of 3.79 points, closing at 2,104.22 points after starting the day at 2,100.43 points. Throughout the trading session, the index experienced fluctuations, briefly dipping to 2,077.64 points before recovering steadily. Trading activity was notably brisk, with daily turnover reaching Rs 5.08 billion, reflecting increased investor participation and market movement.
In the banking sector, there’s a significant disparity between deposits and loans, as reported by the Nepal Rastra Bank. Deposits across commercial banks and finance companies have surged to 63 trillion, while loans extended amount to 51.5 trillion.
These developments in finance and market indices are mirrored in other sectors, such as the precious metals market, where gold prices rose while silver remained stable.
Additionally, favorable weather conditions, including recent rainfall, have significantly boosted Nepal’s hydropower output, marking a recovery from previous declines due to dry weather.
Overall, these economic indicators highlight both opportunities and challenges facing Nepal’s financial and industrial sectors, influenced by both domestic and international factors.
NEPSE rose by 3.79 points, with daily trading volume reaching Rs 5.08 billion
NEPSE edged up by 3.79 points on Wednesday, closing at 2,104.22 points. The secondary market commenced trading at 2,100.43 points, reaching a peak of 2,104.38 points within the first minute.
Subsequently, it briefly dipped to a low of 2,077.64 points before recovering by approximately 18 points over the next ninety minutes. Throughout the afternoon session from 1:15 pm to 2:45 pm, the index fluctuated around 2,090 points.
In the final 15 minutes of trading, it gained about 12 points before the day concluded.
The sensitive index, reflecting the performance of ‘A’ class companies, also rose by 2.13 points. Daily turnover saw a notable increase, climbing to Rs 5.08 billion from Rs 4.57 billion recorded on Tuesday.
Disparity in banking sector: Deposits surge, credit stalls
Recent data from Nepal Rastra Bank highlights a significant gap between deposits and loans in the country’s banking sector.
Deposits across commercial banks and finance companies have exceeded 63 billion, whereas loans extended amount to only 51.5 billion.
Specifically, deposits in commercial banks alone reached 56 trillion 13 billion, with an additional 7 trillion 22 billion in other development banks and finance companies.
Despite an increase of 8 billion in commercial bank deposits from June 15 to 16, loan disbursement saw minimal growth, reflecting ongoing challenges in credit flow management.
Gold prices surge by Rs 400 in domestic market; silver holds steady
On Wednesday, the domestic gold market witnessed a significant increase, with prices rising by Rs 400 per tola compared to Tuesday, as reported by the Nepal Gold and Silver Dealers’ Association.
Fine gold stood at Rs 142,700 per tola, while standard gold was priced at Rs 142,000 per tola, up from Rs 142,300 per tola on Tuesday. In contrast, silver maintained its stability at Rs 1,825 per tola.
These prices were based on the standard measurement of one tola, approximately 11.66 grams.
The rise in gold prices suggested factors like global economic uncertainty or shifts in domestic demand-supply dynamics, while silver’s steady price indicated different market dynamics or investor preferences.
These fluctuations underscored the volatility and complexity of precious metal markets, influencing broader economic trends and investor sentiment.
Frequency arrears dispute: Tata Halts Ncell’s Internet bandwidth
Indian bandwidth supplier Tata has suspended its services to Ncell due to long-overdue payment issues. Ncell owes over a billion rupees in frequency usage fees, prompting the Nepal Telecommunications Authority (NTA) to restrict its foreign currency exchange capabilities.
Consequently, Ncell officials informed Khabarhub that they have been unable to settle their dues with Tata, resulting in a disruption of bandwidth supply since June 17.
Rain boosts Nepal’s hydropower output
Widespread rainfall in Nepal over the past week has significantly increased electricity production from hydropower plants. The surge in water flow in river channels, prompted by the rains, has led to enhanced output from hydroelectric projects located along these water bodies.
This marks a recovery from previous declines in production caused by dry river channels during periods of insufficient rainfall.
Recent reports from the Nepal Electricity Authority indicate a resurgence in electricity production, with peak hour generation reaching 2,500 megawatts as of Tuesday, up from 1,700 megawatts recorded three weeks ago in late May.
The decrease in heat and daily rains have also contributed to a reduction in electricity consumption, which has dropped from 2,300 megawatts in mid-May to 1,450 megawatts currently.
Smuggling: Nepalgunj border routes under scrutiny
Goods are flowing easily across the Nepalgunj border in western Nepal, linked with India, with smugglers effectively circumventing customs officials, security personnel, and others to transport large quantities of items.
Illegally imported goods from India, including clothing, food, motor parts, electronics, and more, are finding their way into markets in Nepalgunj, Kohalpur, and other areas through local traders.
Sources indicate that customs and security personnel stationed at border areas are complicit in facilitating the movement of these goods within the country. Recent reports highlight seizures of smuggled merchandise worth millions of rupees, including a recent raid in Nepalgunj where police recovered clothes valued at Rs 3.83 million.
Stagnant Gautam Buddha Airport strains Lumbini’s economic prospects
Nepal’s Gautam Buddha International Airport, inaugurated in May 2022 in the south of the country, has remained devoid of international flights for the past 18 months.
Despite expectations that it would spur economic growth in Lumbini Province, local businesses and stakeholders are urging the federal government to devise a viable strategy for its operation.
The lack of flights has exacerbated economic challenges in the region, with concerns raised by private sector representatives and civil society leaders about the government’s inaction and its impact on investments.
Directors of cooperatives asked to vacate dual positions
Directors of cooperatives must relinquish dual roles within 30 days, per new directive from the Department of Cooperatives. The Department emphasized adherence to Section 41 (5) of the Cooperatives Act 2074 BS, allowing directors to serve only one cooperative institution concurrently.
Non-compliance will be monitored, with legal actions to follow. Additionally, a circular issued today offers a three-month loan repayment rescheduling for cooperative borrowers.
(Compiled and prepared by Srija Khanal)
Economic Digest is a daily morning economic digest, basically relatable summations of the most important business news, and happenings from Nepal into easy-to-understand summaries.
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