The gross foreign exchange reserves increased 7.4 percent to Rs 1506.06 billion in mid-November 2020 from Rs1401.84 billion in mid-July 2020.
This is stated in the Current Macroeconomic and Financial Situation Report based on four months' data ending Mid-November, 2020/21, the Nepal Rastra Bank (NRB) published on Monday.
In the US Dollar terms, the gross foreign exchange reserves increased 8.6 percent to 12.65 billion in mid-November 2020 from 11.65 billion in mid-July 2020. 22.
Of the total foreign exchange reserves, reserves held by NRB increased 8.6 percent to Rs.1332.06 billion in mid-November 2020 from Rs.1226.12 billion in mid-July 2020. Reserves held by banks and financial institutions (except NRB) decreased 1.0 percent to Rs.173.99 billion in mid-November 2020 from Rs.175.71 billion in mid-July 2020. The share of Indian currency in total reserves stood at 23.2 percent in mid-November 2020.
Foreign Exchange Adequacy Indicators
Based on the imports of four months of 2020/21, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 15.4 months, and merchandise and services imports of 14.0 months, the Central Bank stated. The ratio of reserves-to-GDP, reserves-to-imports and reserves-toM2 stood at 40.0 percent, 116.3 percent and 33.4 percent respectively in mid-November 2020. Such ratios were 37.2 percent, 105.7 percent and 33.1 percent respectively in mid-July 2020.
Inflation
The y-o-y consumer price inflation stood at 4.05 percent in the fourth month of 2020/21 compared to 5.76 percent a year ago. Food and beverage inflation stood at 5.73 percent whereas non-food and service inflation stood at 2.75 percent in the review month. The price of vegetables sub-group rose 20.88 percent and pulses and legumes sub-group rose 13.70 percent on y-o-y basis. In the review month, the Kathmandu Valley, Terai, Hill and Mountain witnessed 3.39 percent, 4.69 percent, 3.64 percent and 4.32 percent inflation respectively. These regions had witnessed 6.50 percent, 6.04 percent, 4.56 percent and 4.01 percent inflation respectively a year ago.
Similarly, the y-o-y wholesale price inflation stood at 9.41 percent in the review month compared to 7.57 percent a year ago. The y-o-y wholesale price of consumption goods, intermediate goods and capital goods increased 7.72 percent, 11.48 percent and 3.45 percent respectively. The wholesale price of construction materials dropped 0.19 percent in the review month.
The y-o-y salary and wage rate index increased 0.85 percent in the review month. Such growth rate was 10.46 percent a year ago. In the review month, wage rate index increased 1.10 percent.
The NRB stated that in four months of 2020/21, merchandise exports increased 10.8 percent to Rs.40.20 billion compared to an increase of 23.9 percent in the same period of the previous year. Destination-wise, exports to India and other countries increased 14.9 percent and 6.5 percent respectively whereas exports to China decreased 59.2 percent.
Exports of cardamom, jute goods, polyster yarn and threads, noodles, and medicine (ayurvedic) among others increased whereas exports of palm oil, pulses, zinc sheet, handicrafts, and skin among others decreased in the review period.
In four months of 2020/21, merchandise imports decreased 10.6 percent to Rs.402.49 billion compared to a decrease of 6.9 percent a year ago. Destination-wise, imports from India, China and other countries decreased 3.1 percent, 25.0 percent, and 19.8 percent respectively. Imports of rice, crude soyabean oil, telecommunication equipment and parts, edible oil, and medical equipments and parts among others increased whereas imports of petroleum products, aircraft spareparts, transport equipment and parts, crude palm oil and other machinery and parts among others decreased in the review period. 9. Based on customs points, exports from Dry Port, Tatopani, Kanchanpur and Rasuwa Customs Office decreased whereas exports from all the other customs points increased in the review period.
On the import side, imports from all the other customs points decreased except Bhairahawa, Biratnagar, Nepalgunj, Krishnanagar, and Kailali Customs Offices in the review period.
Total trade deficit narrowed down 12.5 percent to Rs.362.29 billion in four months of 2020/21. Such deficit had contracted 8.9 percent in the same period of the previous year. The export-import ratio increased to 10.0 percent in the review period from 8.1 percent in the same period of the previous year.
Remittances
Remittance inflows increased 11.2 percent to Rs.337.72 billion in the review period against a decrease of 2.8 percent in the same period of the previous year. In the US Dollar terms, remittance inflows increased 6.4 percent to 2.85 billion in the review period against a decrease of 1.9 percent in the same period of the previous year.
Number of Nepali workers (institutional and individual-new and legalized) taking approval for foreign employment decreased 75.8 percent to 19251 in the review period. It had increased 5.6 percent in the same period of the previous year. The number of Nepali workers (Renew entry) taking approval for foreign employment decreased 67.9 percent to 25931 in the review period. It had increased 9.1 percent in the same period of the previous year. Net transfer increased 8.8 percent to Rs.373.04 billion in the review period. Such transfer had decreased 2.9 percent in the same period of the previous year.
Current Account and Balance of Payments
The current account remained at a surplus of Rs.20.46 billion in the review period against a deficit of Rs.34.12 billion in the same period of the previous year. In the US Dollar terms, the current account recorded a surplus of 170.8 million in the review period against a deficit of 300.8 million in the same period of the previous year.
In the review period, capital transfer decreased 9.3 percent to Rs.4.15 billion and net foreign direct investment (FDI) decreased 23.9 percent to Rs.3.75 billion. In the same period of the previous year, capital transfer and net FDI amounted to Rs.4.57 billion and Rs.4.92 billion respectively.
Balance of Payments (BOP) registered a surplus of Rs.110.65 billion in the review period. Such surplus was Rs.27.29 billion in the same period of the previous year. In the US Dollar terms, the BOP recorded a surplus of 931.7 million in the review period compared to a surplus of 240.8 million in the same period of the previous year.
Foreign Exchange Reserves
Gross foreign exchange reserves increased 7.4 percent to Rs.1506.06 billion in mid-November 2020 from Rs.1401.84 billion in mid-July 2020. In the US Dollar terms, the gross foreign exchange reserves increased 8.6 percent to 12.65 billion in mid-November 2020 from 11.65 billion in mid-July 2020. Of the total foreign exchange reserves, reserves held by NRB increased 8.6 percent to Rs.1332.06 billion in mid-November 2020 from Rs.1226.12 billion in mid-July 2020. Reserves held by banks and financial institutions (except NRB) decreased 1.0 percent to Rs.173.99 billion in mid-November 2020 from Rs.175.71 billion in mid-July 2020. The share of Indian currency in total reserves stood at 23.2 percent in mid-November 2020.
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