Foreign exchange reserves are depleting alarmingly

Foreign exchange reserves are depleting alarmingly

Reserves can only support imports for six and a half months

Foreign exchange reserves are depleting alarmingly

Image for representation.

KATHMANDU: Foreign exchange reserves have been depleted due to heavy imports into the country.

According to data released by the Nepal Rastra Bank (NRB), current foreign exchange reserves can only support the import of goods and services for six and a half months.

Based on six months of imports in fiscal year 2021/22, the banking sector’s foreign exchange reserves will be sufficient to support 7.2 months of imports of goods and 6.6 months of imports of goods and services, said the NRB.

As of mid-January 2022, the ratios of foreign exchange reserves to GDP (previous year), total imports and broad money were 27.3%, 54.8% and 22.0%, respectively.

As of mid-July 2021, these ratios were 32.8%, 84.7% and 27.1% respectively. Total foreign exchange reserves decreased by 16.7% to Rs. 1165.80 billion in mid-January from Rs. 1399.3 billion as in mid-July 2021.

In US dollars, these reserves fell 15.9% to $9.89 billion in mid-January from $11.75 billion in mid-July 2021.

NRB said that out of total foreign exchange reserves, NRB reserves decreased by 18.4% to Rs. 1,015.59 billion in mid-January from Rs. 1,244.63 billion.

Foreign exchange reserves of banks and financial institutions (excluding NRB) decreased by 2.7% to Rs. 150.21 billion in mid-January from Rs. 154.39 billion in mid-July 2021. The Indian currency accounted for 24.5% of total foreign exchange reserves in mid-January this year.