Inflation Lower than Same Period in Previous Fiscal Year, Remittance Inflow Down 6.3%

Nepal Rastra Bank, the central bank of Nepal, has unveiled the current macroeconomic and financial situation of Nepal based on the first two month's data of 2021/22.

Inflation

The y-o-y consumer price inflation stood at 3.49 percent in the second month of 2021/22 compared to 4.52 percent a year ago. Food and beverage inflation stood at 2.57 percent whereas non-food and service inflation stood at 4.22 percent in the review month.

Import and Export

In two months of 2021/22, merchandise exports increased 115.4 percent to Rs.44.04 billion compared to an increase of 10.5 percent in the same period of the previous year. Destination-wise, exports to India, China and other countries increased 150.7 percent, 20.7 percent, and 31.0 percent respectively. Exports of soyabean oil, palm oil, oil cakes, jute goods, polyster yarn & thread, among others, increased whereas exports of tea, medicine (ayurvedic), wire, zinc sheet, and cardamom, among others, decreased in the review period.

In two months of 2021/22, merchandise imports increased 75.9 percent to Rs.314.52 billion against a decrease of 22.1 percent a year ago. Destination-wise, imports from India, China and other countries increased 56.7 percent, 76.2 percent, and 141.4 percent respectively. Imports of petroleum products, transport equipment, vehicle and parts, crude soyabean oil, gold, silver, among others, increased whereas imports of chemical fertilizer, cement, tobacco, molasses sugar and pulses, among others, decreased in the review period.

Total trade deficit increased 70.8 percent to Rs.270.48 billion in two months of 2021/22. Such a deficit had contracted 24.9 percent in the corresponding period of the previous year. The export-import ratio increased to 14.0 percent in the review period from 11.4 percent in the corresponding period of the previous year.

Services and Remittance

Net services income remained at a deficit of Rs.17.52 billion in the review period compared to a deficit of Rs.6.52 billion in the same period of the previous year.

Remittance inflows decreased 6.3 percent to Rs.155.37 billion in the review period against an increase of 8.1 percent in the same period of the previous year. In the US Dollar terms, remittance inflows decreased 5.8 percent to 1.31 billion in the review period against an increase of 2.6 percent in the same period of the previous year.

Price of Oil and Gold

The price of oil (Crude Oil Brent) in the international market increased 82.2 percent to US Dollar 75.14 per barrel in mid-September 2021 from US Dollar 41.23 per barrel a year ago. The price of gold decreased 10.9 percent to US Dollar 1747.95 per ounce in mid-September 2021 from US Dollar 1961.80 per ounce a year ago.

Exchange Rate

Nepalese currency vis-à-vis the US Dollar appreciated 1.5 percent in mid-Septemeber 2021 from midJuly 2021. It had appreciated 2.4 percent in the same period of the previous year. The buying exchange rate per US Dollar stood at Rs.117.29 in mid-September 2021 compared to Rs.119.04 in mid-July 2021.

Banking

Deposits at Banks and Financial Institutions (BFIs) increased 0.7 percent in the review period compared to an increase of 0.5 percent in the corresponding period of the previous year. On y-o-y basis, deposits at BFIs expanded 21.7 percent in mid-September 2021.

Meanwhile, the private sector credit from BFIs increased 5.7 percent in the review period compared to an increase of 0.5 percent in the corresponding period of previous year. On y-o-y basis, credit to the private sector from BFIs increased 33.9 percent in mid-September 2021.

Interest Rates

The average base rate of commercial banks decreased to 6.89 percent in the second month of 2021/22 from 7.83 percent a year ago. Weighted average deposit rate and lending rate of commercial banks stood at 4.92 percent and 8.57 percent respectively in the review month. Such rates were 5.61 percent and 10.18 percent respectively a year ago.