Foreign Exchange Reserves Surges by 14.8 Percent | Trade Deficit Shrinks 3.1 Percent

January 12, 2024 | Investopaper

The gross foreign exchange reserves increased 14.8 percent to Rs.1767.04 billion in mid- December 2023 from Rs.1539.36 billion in mid-July 2023. In the US dollar terms, the gross foreign exchange reserves increased 13.6 percent to 13.31 billion in mid-December 2023 from 11.71 billion in mid-July 2023.

Of the total foreign exchange reserves, reserves held by NRB increased 15.6 percent to Rs.1556.25 billion in mid-December 2023 from Rs.1345.78 billion in mid-July 2023. Reserves held by banks and financial institutions (except NRB) increased 8.9 percent to Rs.210.79 billion in mid-December 2023 from Rs.193.59 billion in mid-July 2023. The share of Indian currency in total reserves stood at 21.6 percent in mid-December 2023.

Based on the imports of five months of 2023/24, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 14.1 months, and merchandise and services imports of 11.8 months. The ratio of reserves-to-GDP, reserves-to-imports and reserves-to-M2 stood at 32.8 percent, 98.3 percent and 27.5 percent respectively in mid-December 2023. Such ratios were 28.6 percent, 83.0 percent and 25.1 percent respectively in mid-July 2023

Exports & Imports

During the five months of 2023/24, merchandise exports decreased 6.1 percent to Rs.63.21 billion compared to a decrease of 34.6 percent in the same period of the previous year.

Destination-wise, exports to India decreased 11.3 percent whereas exports to China and other countries increased 322.3 percent and 2.3 percent respectively. Exports of zinc sheet, particle board, juice, polyster yarn & thread, readymade garments, among others increased whereas exports of palm oil, soyabean oil, tea, woolen carpet, rosin, among others decreased.

Similarly, during the five month of 2023/24, merchandise imports decreased 3.4 percent to Rs.642.21 billion compared to a decrease of 20.7 percent a year ago.

Destination-wise, imports from India and other countries decreased 1.3 percent and 28.4 percent respectively while imports from China increased 32.8 percent. Imports of readymade garments, M.S. wire rod, bars, and coils, electrical equipment, textiles, aircraft spareparts, among others increased whereas imports of gold, crude soyabean oil, crude palm oil, petroleum products, rice/paddy, among others decreased.

Based on customs points, exports from Bhairahawa, Dry Port, Jaleswor, Krishnanagar, Mechi, Rasuwa, Tatopani and Tribhuwan Airport Customs Offices increased whereas exports from all the other major customs points decreased in the review period. On the import side, imports from Bhairahawa, Dry Port, Jaleshwor, Kanchanpur, Krishnanagar, Nepalgunj, Rasuwa and Tatopani Customs Offices increased whereas imports from all the other major customs points decreased in the review period.

Total trade deficit decreased 3.1 percent to Rs.579 billion during the review period. Such a deficit had decreased 18.8 percent in the corresponding period of the previous year. The export-import ratio decreased to 9.8 percent in the review period from 10.1 percent in the corresponding period of the previous year.

Custom-wise Foreign Trade

The custom-wise foreign trade in the five months period is shown in the table below:

‘Rs. in million’

S.N. Major Custom Points Exports Imports
2022/23 2023/24 % Change  2022/23 2023/24 % Change 
1 Bhairahawa Customs Office 3187.1 5420.4 70.1 95009.2 99338.6 4.6
2 Biratnagar Customs Office 19435.5 12883.8 -33.7 78315.5 68987.1 -11.9
3 Birgunj Customs Office 17119.2 12409.2 -27.5 243621.1 217655.7 -10.7
4 Dry Port Customs Office 1509.0 1773.7 17.54 83565.9 88760.2 6.2
5 Jaleshwor Customs Office 642.5 1984.7 208.9 3561.9 4233.8 18.9
6 Kailali Customs Office 406.8 246.2 -39.5 10258.7 8663.7 -15.5
7 Kanchanpur Customs Office 8.1 8.0 -1.9 569.3 824.4 44.8
8 Krishnanagar Customs Office 449.3 910.9 102.8 8130.5 8483.8 4.3
9 Mechi Customs Office 8540.2 10435.4 22.2 20186.3 18236.1 -9.7
10 Nepalgunj Customs Office 747.6 740.8 -0.9 26960.1 28837.7 7.0
11 Rasuwa Customs Office 0.0 571.1 11113.0 23819.8 114.3
12 Tatopani Customs Office 0.0 1.1 4422.4 12652.8 186.1
13 Tribhuwan Airport Customs Office 15224.6 15700.5 3.1 73796.0 57480.9 -22.1
14 Others 34.6 121.8 251.7 5236.4 4234.5 -19.1
Total 67304.5 63207.4 -6.1 664746.5 642209.0 -3.4

Source: Based on customs data

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