A significant improvement has been noticed in the country’s foreign currency reserves in the first seven months of the current fiscal year. Till the end of last fiscal (2021-22), the total forex reserves was calculated at Rs 1215.80 billion and now it has touched Rs 1383.33 billion with a rise of 13.8 percent. According to the Nepal Rastra Bank, gross foreign exchange reserves increased by 13.8 percent to touch Rs. 1383.33 billion in mid-February 2023 from Rs. 1215.80 billion in mid-July 2022.
In the US dollar terms, such reserves increased by 10.2 percent and reached 10.50 billion from 9.54 billion in the given time periods. Of the total foreign exchange reserves, reserves held by NRB increased by 16.2 percent to Rs 1228.05 billion in mid-February 2023 from Rs.1056.39 billion in mid-July 2022. Likewise, reserves held by banks and financial institutions (except NRB) fell by 2.6 percent to sit at Rs.155.28 billion in mid-February 2023 from Rs.159.41 billion in mid-July 2022. As the central bank says, the share of Indian currency in total reserves stood at 22.4 percent in mid-February this year.
Based on the imports of seven months of 2022/23, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 10.8 months, and merchandise and services imports of 9.4 months. The ratio of reserves-to-GDP, reserves-to imports and reserves-to-M2 stood at 28.5 percent, 78.3 percent and 24.0 percent respectively in mid-February 2023. Such ratios were 25.1 percent, 57.8 percent and 22.1 percent respectively in mid-July 2022.
