As per the macroeconomic report published today by Nepal Rastra Bank (NRB), the central bank, the country’s current account remained at a deficit of Rs 247.08 billion in the 10th month of the current fiscal year compared to a deficit of Rs 96.18 billion in the same period of the previous year.
In US dollar terms, the current account registered a deficit of $2.11 billion in the review period compared to a deficit of $855.9 million in the corresponding period of the previous fiscal.
Meanwhile, in the review period, capital transfer increased 11.5 per cent to Rs 13.92 billion and net foreign direct investment (FDI) decreased 19.2 per cent to Rs 14.08 billion. In the same period of the previous year, capital transfer and net FDI amounted to Rs 12.49 billion and Rs 17.43 billion, respectively.
According to the central bank, Balance of Payments (BOP) registered a surplus of Rs 7.75 billion in the review period as compared to a surplus of Rs 120.90 billion in the same period of the previous year. In US dollar terms, the BOP recorded a surplus of $55.4 million in the review period compared to a surplus of $1.01 billion in the same period of the previous year.
NRB has stated that the gross foreign exchange reserves decreased 0.8 per cent to Rs 1,390.84 billion in mid-May 2021 from Rs 1,401.84 billion in mid-July 2020. In US dollar terms, the gross foreign exchange reserves increased 1.9 per cent to $11.87 billion in mid-May 2021 from $11.65 billion in mid-July 2020.
Of the total foreign exchange reserves, reserves held by NRB decreased 0.5 per cent to Rs 1,219.81 billion in mid-May 2021 from Rs 1,226.12 billion in mid-July 2020. Reserves held by banks and financial institutions (except NRB) decreased 2.7 per cent to Rs 171.03 billion in mid-May 2021 from Rs 175.71 billion in mid-July 2020. The share of Indian currency in total reserves stood at 25.1 per cent in mid-May 2021.
Meanwhile, based on the imports during the 10 months of 2020/21, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 11.4 months, and merchandise and services imports of 10.3 months. The ratio of reserves-to-GDP, reserves-to-imports, and reserves-to-M2 stood at 32.6 per cent, 85.9 per cent, and 28.5 per cent, respectively in mid-May 2021. Such ratios were 35.8 per cent, 105.7 per cent, and 33.1 per cent respectively, in mid-July 2020.
The Nepali currency vis-à-vis the US dollar appreciated 2.7 per cent in mid-May 2021 from mid-July 2020. It had depreciated 9.3 per cent in the same period of the previous year. The buying exchange rate per US dollar stood at Rs 117.18 in mid-May 2021 compared to Rs 120.37 in mid-July 2020.