Forex reserves of banking sector sufficient to cover imports of 15 months

KATHMANDU: The country's gross foreign exchange reserves rose by 24.2% to Rs 1,911.86 billion in mid-April 2024, up from Rs 1539.36 billion in mid-July 2023, according to the macroeconomic and financial situation report released by Nepal Rastra Bank (NRB) on Sunday. In US Dollar terms, the gross foreign exchange reserves increased by 22.7% to 14.36 billion in mid-April 2024, up from 11.71 billion in mid-July 2023.

Of the total foreign exchange reserves, those held by the NRB increased by 25.4% to Rs 1,688.21 billion in mid-April 2024, up from Rs 1,345.78 billion in mid-July 2023. Reserves held by banks and financial institutions (excluding the NRB) rose by 15.5% to Rs 223.65 billion in mid-April 2024, up from Rs 193.59 billion in mid-July 2023. The share of Indian currency in total reserves was 21.6% in mid-April 2024.

Foreign Exchange Adequacy Indicators

Based on the imports of the first nine months of 2023/24, the foreign exchange reserves of the banking sector are sufficient to cover prospective merchandise imports for 15 months, and merchandise and services imports for 12.5 months. The ratios of reserves-to-GDP, reserves-to-imports, and reserves-to-M2 stood at 33.5%, 104%, and 28.9% respectively in mid-April 2024. These ratios were 28.8%, 83.0%, and 25.0% respectively in mid-July 2023.