BoP situation has improved : NRB
KATHMANDU:
The improved Balance of Payments (BoP) situation by the end of the fiscal year contributed in slight increment of Rs 3 billion in nation’s gross foreign reserves in last fiscal year.
The gross foreign exchange reserve has reached Rs 272.1 billion by the end of the fiscal year, according to central bank’s annual macroeconomic report for the current fiscal year. In the beginning of the fiscal year 2010-11, central bank had recorded foreign reserve worth Rs 269 billion.
In the fiscal year 2009-10, worsening BoP had depleted Nepal’’’’s foreign exchange reserve had reduced the foreign exchange holding by 6.2 per cent. The foreign exchange reserve of Rs 286.3 billion had gone down to Rs 269 billion as that fiscal year closed in.
In terms of United States Dollar, the gross foreign exchange reserves increased by 0.3 per cent to $3.9 billion in mid-July 2011 from $3.61 billion in mid-July 2010.
As BoP deficit started to widen eroding the liquidity of the nation, the gross foreign reserve also started depleting so that by the eighth month the volume of foreign reserve could have been able to finance the imports for next 6.8 months. The foreign reserve hit the lowest volume at Rs 253 billion by the mid-April 2010. However since then foreign reserve has picked up along with the miraculous improvement in BoP. By the end of last fiscal year, BoP that was deficit by about Rs 11 billion by the tenth month recorded surplus of Rs 2.9 billion.
“Both BoP and foreign reserve has improved due to donor reimbursing the pledged funds to Nepal,” said Dr Bishamber Pyrakurel, executive member of Nepal Rastra Bank (NRB)’’’’s board.
“The problems that has depleting our foreign reserve is still intact and needs to be dealt with,” he added.
The current amount of foreign exchange reserve can shoulder the total estimated imports for next 7.3 months -including both merchandise and service. “Based on the trend of import, the current level of reserves is sufficient for financing merchandise imports of 8.4 months and merchandise and service imports of 7.3 months,” according to the central bank.
The foreign exchange reserves are an important indicator of the nation’’’’s liquidity and ability to finance for the imports. Foreign reserves are assets of the central bank held in different reserve currencies consisting of the foreign currency deposits and bonds. The foreign reserves also showcase the ability to repay debts thus it is major influencing factor in determining the credit rating of any nation.
Moreover, the foreign reserve is also one of the major determining factors in fixing of currency’’’’s foreign exchange rate; however, Nepal does not have to consider that factor as Nepali currency is pegged with Indian currency.
Source: THT
The improved Balance of Payments (BoP) situation by the end of the fiscal year contributed in slight increment of Rs 3 billion in nation’s gross foreign reserves in last fiscal year.
The gross foreign exchange reserve has reached Rs 272.1 billion by the end of the fiscal year, according to central bank’s annual macroeconomic report for the current fiscal year. In the beginning of the fiscal year 2010-11, central bank had recorded foreign reserve worth Rs 269 billion.
In the fiscal year 2009-10, worsening BoP had depleted Nepal’’’’s foreign exchange reserve had reduced the foreign exchange holding by 6.2 per cent. The foreign exchange reserve of Rs 286.3 billion had gone down to Rs 269 billion as that fiscal year closed in.
In terms of United States Dollar, the gross foreign exchange reserves increased by 0.3 per cent to $3.9 billion in mid-July 2011 from $3.61 billion in mid-July 2010.
As BoP deficit started to widen eroding the liquidity of the nation, the gross foreign reserve also started depleting so that by the eighth month the volume of foreign reserve could have been able to finance the imports for next 6.8 months. The foreign reserve hit the lowest volume at Rs 253 billion by the mid-April 2010. However since then foreign reserve has picked up along with the miraculous improvement in BoP. By the end of last fiscal year, BoP that was deficit by about Rs 11 billion by the tenth month recorded surplus of Rs 2.9 billion.
“Both BoP and foreign reserve has improved due to donor reimbursing the pledged funds to Nepal,” said Dr Bishamber Pyrakurel, executive member of Nepal Rastra Bank (NRB)’’’’s board.
“The problems that has depleting our foreign reserve is still intact and needs to be dealt with,” he added.
The current amount of foreign exchange reserve can shoulder the total estimated imports for next 7.3 months -including both merchandise and service. “Based on the trend of import, the current level of reserves is sufficient for financing merchandise imports of 8.4 months and merchandise and service imports of 7.3 months,” according to the central bank.
The foreign exchange reserves are an important indicator of the nation’’’’s liquidity and ability to finance for the imports. Foreign reserves are assets of the central bank held in different reserve currencies consisting of the foreign currency deposits and bonds. The foreign reserves also showcase the ability to repay debts thus it is major influencing factor in determining the credit rating of any nation.
Moreover, the foreign reserve is also one of the major determining factors in fixing of currency’’’’s foreign exchange rate; however, Nepal does not have to consider that factor as Nepali currency is pegged with Indian currency.
Source: THT
