Nepal’s foreign reserve reach record levels, indicating economic stability

KATHMANDU: The fiscal year 2080-81 mid-year review highlights significant strides in Nepal’s external economic sector.

As per the latest economic and financial report unveiled by the Nepal Rastra Bank (NRB) on Tuesday, foreign currency reserves are anticipated to sustain for a year, covering the value of goods and services imports, by the end of Paush.

The total foreign exchange reserves, which amounted to Rs 1.539 trillion until the conclusion of Ashad, have witnessed an impressive 18% growth over six months, reaching Rs 1.816 trillion by the close of Poush.

This represents a historic high in foreign currency reserves, surpassing Nepal’s annual budget.

Within the overall foreign exchange reserves, the central bank’s holdings have surged from Rs 1.345 trillion in Ashad to Rs 1.623 trillion by the conclusion of Paush, demonstrating a growth of 18.9%.

In addition to the central bank, foreign exchange reserves held by banks and financial institutions have risen from Rs 193.59 billion in Ashad to Rs 216.35 billion by the end of Paush, marking an 11.8% increase.

The total foreign exchange reserves at the end of Paush stand at a steady Rs 2.1635 trillion.

Indian currency constitutes 22.5% of the total foreign exchange reserves by the end of Paush. The overall composition of foreign exchange reserves, with a ratio of 33.08% in GDP, 9.27% in total imports, and 27.07% in extensive currency supply, remains consistent.

In the mid-year review of the fiscal year, the current account surplus stands at Rs 161 billion. In the corresponding period last year, there was a deficit of Rs 35.57 billion. This improvement is credited to a 30% reduction in net transfers, resulting in a surplus of Rs 3.11 billion, while foreign direct investment remains positive at Rs 4.53 billion.

The overall balance of payments, which recorded a deficit of Rs 35.57 billion in the same period last year, has now turned into a surplus of Rs 161 billion. The positive trend in foreign exchange reserves is expected to persist, contributing to macroeconomic stability in the upcoming months.