Weak rupee fails to boost exports
KATHMANDU:
A stronger dollar seems to have discouraged imports but it did not succeed in boosting exports.
Trade deficit widened by 4.5 per cent to Rs 41.56 billion in the first month of the current fiscal year, according to Nepal Rastra Bank’s macroeconomic data. During the same period last fiscal, trade gap had surged by almost 50 per cent.
In the first month of this current fiscal, US dollar’s exchange rate against Nepali rupee appreciated by more than five per cent. A stronger dollar discouraged importers from bringing in more goods from third countries from mid-July to mid-August this year than in the same period a year ago. In review period this year, Nepal imported goods worth Rs 17.3 billion, while in the corresponding period last year goods worth Rs 18.2 billion were imported.
A stronger dollar that made imported items expensive discouraged imports. Even in US dollar terms, imports from other countries decreased by 13.9 per cent to $177.1 million compared to an increase of 10.4 per cent a year ago.
“Though it is difficult to assess the actual impact of the dollar in the trade balance, it has had an effect,” said senior economist Dr Bishwambher Pyakurel.
However, Nepali exporters could not take advantage of depreciated domestic currency that makes Nepali goods relatively cheaper overseas. Exports to other countries fell by 7.7 per cent in the review period as Nepal exported goods worth Rs 2.8 billion while in the same period of the previous year, export receipts amounted to Rs 3.04 billion.
The strong dollar saved export receipts from contracting further. In US dollar terms, exports to other countries decreased by 16.4 per cent to $28.7 million in contrast to an increase of 14.4 per cent during the corresponding period of the previous fiscal. “Nepal already suffers from high cost of production due to lack of infrastructure and electricity, and now raw materials have also become expensive for goods being manufactured here using imported inputs,” said Dr Pyakurel.
Total merchandise exports went up by 5.4 per cent to Rs 7.59 billion, while merchandise imports increased by 4.6 per cent to Rs 49.15 billion. Imports from India, meanwhile, went up by 10.7 per cent to Rs 31.8 billion, while exports of Nepali merchandise goods to India grew by 15.1 per cent to Rs 4.8 billion.
Overall Balance of Payments recorded a surplus of Rs 16.09 billion in first month compared to a surplus of Rs 5.56 billion in same period of previous year. A low growth of merchandise imports and decline in service imports in the review period caused the current account surplus to stand at Rs 10.07 billion.
Source: THT
