Foreign Exchange Reserves Increases by 18.9 Percent | Trade Deficit Widens 6.4 Percent

May 13, 2025 | Investopaper

The gross foreign exchange reserves increased 18.9 percent to Rs.2426.84 billion in mid-April 2025 from Rs.2041.10 billion in mid-July 2024. In the US dollar terms, the gross foreign exchange reserves increased 15.4 percent to 17.63 billion in mid-April 2025 from 15.27 billion in mid-July 2024.

Of the total foreign exchange reserves, the reserves held by NRB increased 15.6 percent to Rs.2136.46 billion in mid-April 2025 from Rs.1848.55 billion in mid-July 2024. Reserves held by banks and financial institutions (except NRB) increased 50.8 percent to Rs.290.38 billion in mid-April 2025 from Rs.192.55 billion in mid-July 2024. The share of Indian currency in total reserves stood at 20.4 percent in mid-April 2025.

Based on the imports of nine months of 2024/25, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 17.1 months, and merchandise and services imports of 14.2 months. The ratio of reserves-to-GDP, reserves-to-imports and reserves-to-M2 stood at 39.7 percent, 118.7 percent and 32.8 percent respectively in mid-April 2025. Such ratios were 35.8 percent, 108.6 percent and 29.3 percent respectively in mid-July 2024.

Exports & Imports

During the nine months of 2024/25, merchandise exports increased 65.2 percent to Rs.188.20 billion against a decrease of 3.7 percent in the same period of the previous year. Destinationwise, exports to India, China and other countries increased 92.6 percent, 6.7 percent and 5.8 percent respectively. Exports of soyabean oil, polyster yarn and thread, tea, jute goods, and rosin, among others increased whereas exports of palm oil, zinc sheet, ginger, juice, and readymade garments, among others decreased in the review period.

Similarly, during the nine months of 2024/25, merchandise imports increased 12.2 percent to Rs.1309.53 billion against a decline of 2.8 percent a year ago. Destination-wise, imports from India, China and other countries increased 7.7 percent, 14.4 percent and 24.9 percent respectively. Imports of crude soyabean oil, rice/paddy, transport equipment, vehicle and spare parts, edible oil, sponge iron, among others increased whereas imports of petroleum products, crude palm oil, aircraft spareparts, chemical fertilizer, and writing and printing paper among others decreased in the review period.

Total trade deficit increased 6.4 percent to Rs.1121.34 billion during the nine months of 2024/25. Such a deficit had decreased 2.8 percent in the corresponding period of the previous year. The export-import ratio increased to 14.4 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 nine 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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