Forex reserve starts looking up
KATHMANDU:
The foreign exchange reserve has leapt by Rs 11.67 in the first month of the current fiscal year, thanks to improved Balance of Payments (BoP) situation.
The gross foreign exchange reserve has touched Rs 283.77 billion by the mid-August, according to central bank. At the end of last fiscal year, Nepal was holding foreign reserve worth Rs 272.1 billion.
By the first month, the Balance of Payment (BoP) also recorded a surplus of Rs 8.5 billion unlike last fiscal year, when BoP was surplus by Rs 1.5 billion only.
Increasing foreign exchange reserve means Nepal is becoming richer and its ability to buy goods and services from foreign countries is strengthening.
In last five fiscal years, forex reserve has gone through quite a roller coaster ride. The reserve that stood at Rs 165.2 billion by the end of fiscal year 2006-07 soared to Rs 279.9 billion as fiscal year 2008-09 drew to close — the jump of entire Rs 115 billion in just two years.
However, following the deteriorating BoP situation of fiscal year 2009-10, the forex reserve also declined by about Rs 11 billion.
According to Nepal Rastra Bank (NRB)’s estimation based on the trend of import the current level of forex reserves is sufficient for imports for next 7.6 months — including both goods and services imports. The forex reserve can shoulder the merchandise imports excluding service import for next 8.9 months, it added.
The foreign exchange reserves are assets of the central bank held in different reserve currencies consisting of the foreign currency deposits held by the central bank and monetary authorities. It is an important indicator for the nation’s liquidity and ability to finance imports. The foreign reserves also showcase the ability to repay debts making it a major influencing factor in determining the credit rating of any nation.
Moreover, the foreign exchange reserve commonly known as forex 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 being pegged with Indian currency although fluctuation in India’s forex reserve affects the value of our currency against others.
The prolonged deficit Balance of Payments (BoP) in most part of last fiscal year and the one preceding last, Nepal lost a huge chunk of its forex reserve. To meet BoP deficit Nepal had borrowed some SDR 28.52 million from International Monetary Fund (IMF) under Rapid Credit Facility (RCF).
In terms of dollar, the gross foreign exchange reserves increased by 0.6 per cent to $3.9 billion in mid-August 2011 from $3.8 billion in mid-July 2011.
Source: THT
The foreign exchange reserve has leapt by Rs 11.67 in the first month of the current fiscal year, thanks to improved Balance of Payments (BoP) situation.
The gross foreign exchange reserve has touched Rs 283.77 billion by the mid-August, according to central bank. At the end of last fiscal year, Nepal was holding foreign reserve worth Rs 272.1 billion.
By the first month, the Balance of Payment (BoP) also recorded a surplus of Rs 8.5 billion unlike last fiscal year, when BoP was surplus by Rs 1.5 billion only.
Increasing foreign exchange reserve means Nepal is becoming richer and its ability to buy goods and services from foreign countries is strengthening.
In last five fiscal years, forex reserve has gone through quite a roller coaster ride. The reserve that stood at Rs 165.2 billion by the end of fiscal year 2006-07 soared to Rs 279.9 billion as fiscal year 2008-09 drew to close — the jump of entire Rs 115 billion in just two years.
However, following the deteriorating BoP situation of fiscal year 2009-10, the forex reserve also declined by about Rs 11 billion.
According to Nepal Rastra Bank (NRB)’s estimation based on the trend of import the current level of forex reserves is sufficient for imports for next 7.6 months — including both goods and services imports. The forex reserve can shoulder the merchandise imports excluding service import for next 8.9 months, it added.
The foreign exchange reserves are assets of the central bank held in different reserve currencies consisting of the foreign currency deposits held by the central bank and monetary authorities. It is an important indicator for the nation’s liquidity and ability to finance imports. The foreign reserves also showcase the ability to repay debts making it a major influencing factor in determining the credit rating of any nation.
Moreover, the foreign exchange reserve commonly known as forex 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 being pegged with Indian currency although fluctuation in India’s forex reserve affects the value of our currency against others.
The prolonged deficit Balance of Payments (BoP) in most part of last fiscal year and the one preceding last, Nepal lost a huge chunk of its forex reserve. To meet BoP deficit Nepal had borrowed some SDR 28.52 million from International Monetary Fund (IMF) under Rapid Credit Facility (RCF).
In terms of dollar, the gross foreign exchange reserves increased by 0.6 per cent to $3.9 billion in mid-August 2011 from $3.8 billion in mid-July 2011.
Source: THT
