KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
In fiscal year 2080/81 BS, Nepal’s trade deficit contracted by approximately 1.72 percent, largely due to a decline in imports, which decreased by 1.84 percent to about Rs. 1.453 trillion. Key imports included mineral fuels, iron and steel, electrical machinery, mechanical appliances, and vehicles, reflecting shifting domestic demands.
Meanwhile, exports reached Rs. 130 billion, driven by sectors like coffee, tea & spices, iron/steel, and man-made fibers, although they fell by 3.01 percent from the previous year. The Nepali rupee also hit a historic low against the US dollar, impacting inflation concerns, particularly in essential goods priced in dollars like edible oil and petroleum products.
Import decline shrinks Nepal’s trade gap
In the first eleven months of fiscal year 2080/81 BS, Nepal’s economic landscape revealed a notable development in its trade dynamics. The trade deficit has narrowed by approximately 1.72 percent, largely attributed to a decline in imports.
During this period, imports decreased by about 1.84 percent, totaling approximately Rs. 1.453 trillion, contrasting with Rs. 1.48 trilion in the same period of the previous fiscal year.
Key imported items included mineral fuels, iron and steel, electrical machinery, mechanical appliances, and vehicles, reflecting shifts in domestic consumer and industrial demands.
Conversely, Nepal’s exports amounted to Rs. 130 billion over eleven months, driven primarily by sectors such as coffee, tea & spices, iron/steel, and man-made staple fibers, representing the highest export volumes.
However, exports declined by about 3.01 percent compared to the previous year’s Rs. 143 billion, posing challenges to economic growth and stability, impacting critical indicators like GDP, exchange rates, inflation, and interest rates.
Nepali Rupee hits record low against US dollar on Saturday
The Nepali rupee reached its lowest ever value against the US dollar. Nepal’s central bank set the exchange rate at Rs134.15 per US dollar for Friday, marking a historic decline.
The rupee depreciated by 31 paisa in just one day, largely influenced by the weakening of the Indian rupee, to which it is closely tied. Economists warn that Nepal, heavily reliant on imports, could experience significant inflation as most goods and services are priced in dollars.
Essential commodities such as edible oil, petroleum products, and food items, priced globally in dollars, become more expensive for Nepali consumers with a stronger dollar. Given that food constitutes a substantial portion of household spending, the ongoing depreciation of the local currency further escalates prices in Nepal.
Koshi Province Assembly gives nod to FY 2024/25 budget
The budget for the fiscal year 2024/25 has been approved by the Koshi provincial assembly. Presented by the provincial government on June 15, the budget received majority approval during a Saturday meeting of the assembly.
The approved budget totals Rs 35.279 billion. Current expenses are allocated Rs 14.47 billion, while Rs 16.20 billion is earmarked for capital expenditures.
Additionally, Rs 2 million is designated for financial management, and Rs 4.58 billion has been set aside for financial transfers to local levels. The budget also specifies Rs 3 billion for covering federal grant repayments from current expenditures.
Surge in electric vehicle imports despite increased duties
In the penultimate month of the current fiscal year, Nepal saw the arrival of approximately 3,000 electric vehicles (EVs). The Government of Nepal (GON) had announced a 10 percent hike in customs and excise duty on EV imports on May 28, aiming to discourage imports. Contrary to expectations, the number of imported EVs significantly rose.
Before the duty increase, May alone witnessed the importation of nearly 3,000 EV units. According to the Department of Customs, by mid-June, a total of 11,466 EVs (including cars, jeeps, and vans) had been imported during the current fiscal year.
During the tenth month (Baisakh) of this fiscal year, Nepal imported a total of 8,417 EVs. The subsequent month saw an additional 969 units of electric vehicles brought into the country.
Stable foreign exchange rates
The Nepal Rastra Bank (NRB) announced the foreign currency exchange rates for Sunday. All major foreign currencies, including the US Dollar, Euro, Australian Dollar, Pound, and Dinar, are stable.
Transactions for these currencies will occur at the same trading prices as Saturday, according to Nepal Rastra Bank.
Today’s update from Nepal Rastra Bank confirms stability in the exchange rates of key foreign currencies. The statement ensures continuity from Saturday’s rates, indicating no fluctuations in trading values for these currencies.
The buying rate for 1 US Dollar is 133 rupees 36 paisa, and the selling rate is 133 rupees 96 paisa, unchanged from Saturday.
Similarly, the buying rate for 1 Euro is 142 rupees 51 paisa, and the selling rate is 143 rupees 15 paisa. The buying rate for 1 British Pound is 168 rupees 51 paisa, and the selling rate is 169 rupees 27 paisa.
According to NRB, the buying rate for 1 Australian Dollar is 88 rupees 80 paisa, and the selling rate is 89 rupees 20 paisa.
(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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