Nepal's Foreign Exchange Reserves Reach Record High

Kathmandu. Nepal's foreign exchange reserves have reached a new peak. According to the Nepal Rastra Bank, the total foreign exchange reserves increased to 3.413 trillion 770 million rupees by the end of Falgun in the current fiscal year 2082/83.

Such reserves, which stood at 2.677 trillion 640 million rupees at the end of Ashar 2082, have increased by 27.5 percent within an eight-month period. There has also been a significant surge in reserves in US dollars. The reserves, which were 19.50 billion dollars at the end of Ashar, increased by 18.3 percent to reach 23.08 billion dollars by the end of Falgun.

Of the total reserves, 3.035 trillion 110 million rupees are held by the Nepal Rastra Bank, which is 25.7 percent higher compared to Ashar. Similarly, banks and financial institutions hold 378.66 billion rupees in foreign currency reserves. The share of Indian currency in the total reserves is 21 percent.

Based on reserve adequacy indicators, Nepal's economy has reached its most secure state to date. According to the Rastra Bank's data, this foreign currency held by the banking sector will be sufficient to cover 21.4 months of merchandise imports and 18.5 months of merchandise and service imports. While international practice generally considers reserves sufficient to cover 6 to 7 months of imports as healthy, Nepal's capacity to cover 18.5 months of imports clearly indicates that the economy is in a very strong position.

At the end of Falgun, the ratio of foreign exchange reserves to Gross Domestic Product (GDP) was 55.9 percent, the ratio to total imports was 153.4 percent, and the ratio to broad money supply was 40.8 percent.