Foreign Exchange Reserves Increases by 11.4 Percent | Trade Deficit Widens 1.5 Percent

January 12, 2025 | Investopaper

The gross foreign exchange reserves increased 11.4 percent to Rs.2273.26 billion in mid-December 2024 from Rs.2041.10 billion in mid-July 2024. In the US dollar terms, the gross foreign exchange reserves increased 9.7 percent to 16.76 billion in midDecember 2024 from 15.27 billion in mid-July 2024.

Of the total foreign exchange reserves, the reserves held by NRB increased 10.0 percent to Rs.2033.27 billion in mid-December 2024 from Rs.1848.55 billion in mid-July 2024. Reserves held by banks and financial institutions (except NRB) increased 24.6 percent to Rs.240 billion in mid-December 2024 from Rs.192.55 billion in mid-July 2024. The share of Indian currency in total reserves stood at 22.8 percent in mid-December 2024.

Based on the imports of five months of 2024/25, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 17.6 months, and merchandise and services imports of 14.6 months. The ratio of reserves-to-GDP, reserves-to-imports and reserves-to-M2 stood at 39.8 percent, 121.6 percent and 31.6 percent respectively in midDecember 2024. Such ratios were 35.8 percent, 108.6 percent and 29.3 percent respectively in midJuly 2024

Exports & Imports

During the five months of 2024/25, merchandise exports increased 16.5 percent to Rs.73.66 billion against a decrease of 6.1 percent in the same period of the previous year.

Destination-wise, exports to India and China increased 23.7 percent and 68.9 percent respectively whereas export to other countries decreased 1.2 percent. Exports of soyabean oil, tea, polyster yarn and thread, particle board, woolen carpet, among others increased whereas exports of palm oil, zinc sheet, ginger, readymade garments, herbs, among others decreased in the review period.

Similarly, during the five months of 2024/25, merchandise imports increased 3 percent to Rs.661.49 billion against a decline of 3.4 percent a year ago.

Destination-wise, imports from India and China increased 4.0 percent and 4.6 percent respectively, while import from other countries decreased 1.8 percent. Imports of transport equipment, vehicle and other vehicle spare parts, crude soyabean oil, sponge iron, garlic, edible oil, among others increased whereas imports of petroleum products, gold, crude palm oil, peas, bitumen, among others decreased in the review period

Based on customs points, exports from Bhairahawa, Biratnagar, Birgunj, Dry port, Kailali, Krishnanagar, Mechi, Nepalgunj, and Rasuwa customs offices increased whereas exports from all other major customs points decreased in the review period. On the import side, imports from Bhairahawa, Biratnagar, Birgunj, Jaleshwor, Kailali, Krishnanagar, Mechi, Nepalgunj, Rasuwa, and Tatopani customs offices increased whereas imports from all other major customs points decreased in the review period.

Total trade deficit increased 1.5 percent to Rs.587.83 billion during the five months of 2024/25. Such a deficit had decreased 3.1 percent in the corresponding period of the previous year. The export-import ratio increased to 11.1 percent in the review period from 9.8 percent in the corresponding period of the previous year

Custom-wise Foreign Trade

The custom-wise foreign trade in the first five months of the current fiscal year 2024/25 is shown in the table below:

‘Rs. in million’

Source: Based on customs data

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