Nepal’s Foreign Exchange Reserves Reach Rs 1,872.82 Billion

Nepal’s economic landscape sees a significant uptick as the country’s gross foreign exchange reserves witness a notable surge. According to the Nepal Rastra Bank’s recent report, released on Thursday, Nepal’s gross foreign exchange reserves soared by a substantial 21.7% to reach Rs 1,872.82 billion in mid-March 2024, compared to Rs 1,539.36 billion in mid-July 2023.

In US dollar terms, this translates to a commendable 20.8% increase, with reserves climbing to $14.14 billion from $11.71 billion over the same period. The central bank played a pivotal role in this growth, as its foreign exchange reserves expanded by 22.2% to Rs 1644.06 billion, up from Rs. 1345.78 billion, while reserves held by banks and financial institutions surged by 18.2% to Rs 228.76 billion.

The report highlights the resilience of Nepal’s economy, with the share of Indian currency in total reserves standing at 22.1% in mid-March 2024. Importantly, the foreign exchange reserves of the banking sector are robust enough to cover prospective merchandise imports for 14.8 months and merchandise and services imports for 12.4 months, reflecting a healthy economic stance.

Furthermore, Nepal’s current account boasts a surplus, marking a significant turnaround from previous periods. In the review period, the current account registered a surplus of Rs 166.87 billion, compared to a deficit of Rs 55.28 billion in the previous year. Similarly, in US Dollar terms, the current account displayed a surplus of $1.25 billion, contrasting with a deficit of $429.3 million in the same period last year.

Despite a decrease in capital transfer by 30.2% to Rs 3.89 billion, net foreign direct investment (FDI) remained positive at Rs 5.63 billion, contributing to the overall balance of payments (BoP) surplus. The BoP stood at a surplus of Rs 327.55 billion in the review period, compared to Rs 142 billion in the previous fiscal year. In US Dollar terms, the BoP also remained in surplus, reaching $2.46 billion.

This robust performance signals positive momentum for Nepal’s economy, underlining its resilience and stability amidst global economic challenges.