KATHMANDU: Economic Digest offers a concise yet comprehensive overview of significant business happenings in Nepal, presented in easily digestible summaries.
The latest economic data released by the Nepal Rastra Bank (NRB) indicates a positive outlook for the country’s external economic situation, even as the stock market continues to experience a downward trend.
According to the ‘Current Economic and Financial Situation of the Country’ report published on Monday, key indicators such as inflation rates and foreign exchange reserves have shown improvements compared to the previous year.
Inflation falls, foreign exchange reserves strong
The report shows that annual point consumer inflation for the month of Magh has decreased to 4.16%, a significant drop from 5.01% recorded in the same month of the previous year. Inflation in the food and beverage group stands at 4.95%, while inflation in the non-food and services group is 3.74%.
Moreover, Nepal’s foreign exchange reserves have also improved, with the reserves now sufficient to cover 14 months of imports. This positive development provides a sense of relief amid global economic uncertainties, indicating that Nepal’s external sector is in good shape.
Stock market slump continues
Despite the favorable external indicators, the stock market witnessed another decline on Monday. The Nepal Stock Exchange (NEPSE) fell by 20.68 points to settle at 2,751.42 points. This marks the second consecutive day of decline after a significant drop on Sunday.
Along with the fall in the NEPSE index, trading volume also took a hit. On Monday, only 150.09 million shares worth Rs 8.37 billion rupees were traded, reflecting a decrease in investor confidence.
Gold price sees modest increase
The price of gold has seen a slight rise in the Nepali market today. According to the Federation of Nepal Gold and Silver Dealers Association, the price of gold has increased by Rs 100 per tola, reaching Rs 170,400 per tola. On Sunday, the price was Rs 170,300 per tola. Meanwhile, the price of silver has remained unchanged. Silver continues to trade at Rs 1,985 per tola, the same price as the previous day.
Securities worth 16.66 billion listed in seven months
Despite the market’s downward trend, the Nepal Stock Exchange saw the listing of securities worth 16.66 billion rupees in the first seven months of the current fiscal year. This data, released by the NRB, highlights the ongoing capital mobilization despite recent volatility.
Bank profits up despite losses among finance companies
Commercial banks have posted robust profits amid mixed performance in the financial sector. The combined profit of commercial banks has reached 36 billion rupees as of mid-Magh. However, not all financial institutions have fared well.
Seven finance companies reported net losses during the same period. Among them, Pokhara Finance recorded the highest loss of 590 million rupees. On the other hand, Janaki Finance Company led the pack in terms of net profit among operational finance companies.
Earthquake reconstruction unit established after 16 months
In a separate development, the government has established the Earthquake Reconstruction Project Unit office in Jajarkot, 16 months after the devastating earthquake of November 3, 2023. The office, tasked with overseeing reconstruction in Jajarkot, Rukum Paschim, and Salyan, aims to expedite rebuilding efforts in coordination with the National Disaster Risk Reduction and Management Authority and other local government bodies.
The delay in establishing the office had been widely criticized, but the government hopes the new unit will speed up reconstruction efforts, providing much-needed relief to affected communities.
Sugar industry faces sugarcane shortage
Meanwhile, the Everest Sugar and Chemical Industries located in Ramnagar, Gaushala-1, Mahottari, is grappling with a shortage of sugarcane. This situation is unprecedented for the industry, which traditionally continues sugar production until Baisakh.
The shortage during the peak production month of Falgun has raised concerns over the sustainability of the domestic sugar industry. Local farmers attribute the decline in sugarcane supply to low prices and poor government support, pushing many to switch to more profitable crops.
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