Forex reserves of banking sector sufficient to cover imports of 15.1 months: NRB

KATHMANDU: The country's gross foreign exchange reserves rose by 26.2% to Rs 1942.4 billion in mid-May 2024, up from Rs 1539.36 billion in mid-July 2023, as per the macroeconomic and financial situation report issued by the Nepal Rastra Bank (NRB) on Monday. In terms of US dollars, the gross foreign exchange reserves surged by 24.2% to $14.54 billion in mid-May 2024, up from $11.71 billion in mid-July 2023.

Out of the total foreign exchange reserves, the reserves held by the NRB saw an increase of 28% to Rs 1722.02 billion in mid-May 2024, up from Rs 1345.78 billion in mid-July 2023. The reserves held by banks and financial institutions (excluding the NRB) rose by 13.8% to Rs 220.38 billion in mid-May 2024, up from Rs 193.59 billion in mid-July 2023. The proportion of Indian currency in the total reserves was 22.1% in mid-May 2024.

Foreign Exchange Adequacy Indicators

Based on the imports of the 10 months of 2023/24, the foreign exchange reserves of the banking sector are adequate to cover the prospective merchandise imports for 15.1 months, and merchandise and services imports for 12.6 months. The ratios of reserves-to-GDP, reserves-to-imports, and reserves-to-M2 were 34%, 105.3%, and 29.2% respectively in mid-May 2024. These ratios were 28.8%, 83.0%, and 25.0% respectively in mid-July 2023.