KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.

The economic situation in Nepal shows a mix of trends. Despite fewer Nepalis going abroad, remittance inflow increased by 20%, reaching Rs 1,198.6 billion in 2023/24, indicating the resilience of the remittance-dependent economy.

However, Nepali students’ spending on education abroad surged to over Rs 104 billion, a significant rise from the previous year, reflecting increasing demand for international education.

Conversely, the decrease in Nepali workers going abroad suggests potential shifts in employment patterns or policies. Despite this, the current account surplus, increased FDI, and BOP surplus growth indicate positive economic indicators.

Although merchandise exports declined, exports to China surged, while imports decreased, influencing trade dynamics. The surge in foreign exchange reserves by 26.2% indicates a strengthened external financial position.

Remittance inflow increases by 20 percent

Despite fewer people going abroad this fiscal year, remittance inflow has increased by around 20 percent due to the robust exchange rate of the US dollar and other factors.

The country received Rs 1,198.6 billion in remittances in the first ten months of 2023/24.

According to the Nepal Rastra Bank (NRB), this is a 19.2 percent increase compared to a 23.4 percent rise in the same period last year.

In US Dollar terms, remittance inflows grew by 17.1 percent to $9.02 billion, compared to a 13.4 percent increase in the previous year.

Nepali students’ education spending abroad rops Rs 104 billion

Nepali students going abroad for education have spent over Rs 104 billion in the first 10 months of the current fiscal year, according to the Nepal Rastra Bank (NRB).

This amount is Rs 29 billion more than the same period last year when students spent Rs 75.14 billion. Additionally, Nepali citizens spent Rs 52 billion on international travel during this period, as per the NRB report.

Nepali workers flying abroad deceases

The number of Nepali workers taking approval for foreign employment stood at 374,887, while those taking approval for re-entry stood at 237,893.

In the previous year, these numbers were 421,279 and 238,976, respectively. Additionally, consumer price inflation moderated to 4.4 percent in mid-May 2024, compared to 7.41 percent a year ago.

Current account surplus and increased FDI signal economic growth

The current account has remained at a surplus of Rs 193.25 billion during the review period, compared to a deficit of Rs 63.74 billion in the same period of the previous year, according to Nepal Rastra Bank.

In the review period, the net foreign direct investment (FDI) remained positive at Rs 6.98 billion, up from Rs 4.36 billion in the same period of the previous year, the NRB stated in its report.

BOP surplus grows despite merchandise export decline

The Balance of Payments (BOP) remained at a surplus of Rs 392.64 billion in the review period, up from Rs 209.49 billion in the same period of the previous year. Despite this improvement, merchandise exports continued to decrease, falling by 3.6 percent to Rs 126.17 billion, compared to a significant 24.5 percent decrease in the same period of the previous year.

Nepal’s exports to China surge, imports decline

Nepal’s exports to India decreased by 5.6 percent, while exports to China increased by 68.1 percent, the central bank stated. Imports decreased by 2.4 percent to Rs 1,303.36 billion compared to a decrease of 16.8 percent a year ago.

According to the Nepal Rastra Bank, imports from India and other countries decreased by 3.4 percent and 20.8 percent respectively, while imports from China increased by 34.4 percent.

The NRB reported increases in exports of zinc sheet, particle board, juice, and readymade garments, among others, while exports of palm oil, soyabean oil, woolen carpets, and tea decreased. Imports of transport equipment, vehicle spare parts, readymade garments, and textiles increased, while imports of crude soyabean oil, gold, and rice/paddy decreased.

Foreign exchange reserves surge by 26.2 percent

The gross foreign exchange reserves increased by 26.2 percent, reaching Rs 1,942.4 billion in mid-May 2024, up from Rs 1,539.36 billion in mid-July 2023.

In US dollar terms, the gross foreign exchange reserves increased by 24.2 percent to $14.54 billion in mid-May 2024 from $11.71 billion in mid-July 2023.

Govt executes Rs 2.40 billion cash transfers in one month

In a one-month span between mid-April and mid-May, the government executed cash transfers amounting to Rs 2.40 billion, primarily allocated to 30 projects under the Ministries of Energy, Water Resources and Irrigation, Physical Infrastructure and Transport, Defence, and Urban Development.

Notably, a significant portion of the budget, exceeding Rs 10 million originally earmarked for capital expenditure, was reallocated to other sub-heads during this period. Such budget transfers, a common practice, often stem from government agencies’ failure to exhaust allocated funds, despite annual capital expenditure hovering around 70 percent.

NEPSE rises by 8.90 points, transactions reach nearly Rs 5.5 billion

The Nepal Stock Exchange (NEPSE) gained 8.90 points, closing at 2082.09 points, marking a 0.42% increase on Monday. Transactions totaled nearly Rs 5.5 billion, with shares worth Rs 5.49 billion traded.

Among 314 companies, 176 saw an increase, 61 declined, and 9 remained stable. The Float Index, Sensitive Index, and Sensitive Float Index rose. Seven sectors saw an increase while six declined.

Non-Life Insurance sector rose by 134.88 points, but Hotels and Tourism sector dropped by 51.16 points.

Shares of Kutheli Bukhari Small Hydropower, Trishuli Hydropower, Peoples Power, and Molung Hydropower surged by 10 percent.

Gold market remains stable

On Monday, the domestic gold market experienced a static trend, with prices remaining stagnant. Fine gold maintained its stability at Rs 141,000 per tola, while standard gold also held steady at Rs 140,300 per tola. Similarly, the price of silver remained unchanged at Rs 1,825 per tola.

This lack of movement indicated a period of relative stability in precious metal prices, potentially influenced by factors such as market demand, global economic conditions, and investor sentiment.

However, while stability provided a sense of reassurance to investors and consumers, it also raised questions about the market’s responsiveness to external stimuli and its ability to reflect shifts in broader economic dynamics.

Tuesday’s foreign currency exchange rates

The foreign currency exchange rates from the Nepal Rastra Bank on Tuesday reveal a mixed performance against the Nepali rupee.

The US dollar and Kuwaiti dinar have both strengthened, with the US dollar’s buying rate rising to Rs 133.32 and selling rate to Rs 133.92, while the Kuwaiti dinar’s rates increased to Rs 434.55 (buying) and Rs 436.51 (selling).

Conversely, the European euro has weakened, with the buying rate dropping to Rs 143.27 and the selling rate to Rs 143.91. The British pound has remained relatively stable, with minor increases to Rs 169.42 (buying) and Rs 170.19 (selling).

The Australian dollar has also strengthened, with rates rising to Rs 87.88 (buying) and Rs 88.27 (selling). Similarly, the Bahraini dinar has seen an increase, with rates moving up to Rs 353.68 (buying) and Rs 355.27 (selling).

In summary, the US dollar, Kuwaiti dinar, Australian dollar, and Bahraini dinar have gained value, while the euro has weakened, and the pound has shown slight stability.

(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.