Foreign Exchange Reserves Surges by 24.2 Percent | Trade Deficit Shrinks 2.8 Percent

May 13, 2024 | Investopaper

The gross foreign exchange reserves increased 24.2 percent to Rs.1911.86 billion in mid-April 2024 from Rs.1539.36 billion in mid-July 2023. In the US dollar terms, the gross foreign exchange reserves increased 22.7 percent to 14.36 billion in mid-April 2024 from 11.71 billion in mid-July 2023.

Of the total foreign exchange reserves, reserves held by NRB increased 25.4 percent to Rs.1688.21 billion in mid-April 2024 from Rs.1345.78 billion in mid-July 2023. Reserves held by banks and financial institutions (except NRB) increased 15.5 percent to Rs.223.65 billion in mid-April 2024 from Rs.193.59 billion in mid-July 2023. The share of Indian currency in total reserves stood at 21.6 percent in mid-April 2024.

Based on the imports of nine months of 2023/24, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 15 months, and merchandise and services imports of 12.5 months. The ratio of reserves-to-GDP, reserves-to-imports and reserves-to-M2 stood at 33.5 percent, 104 percent and 28.9 percent respectively in mid-April 2024. Such ratios were 28.8 percent, 83.0 percent and 25.0 percent respectively in mid-July 2023.

Exports & Imports

During the nine months of 2023/24, merchandise exports decreased 3.7 percent to Rs.113.95 billion compared to a decrease of 26.3 percent in the same period of the previous year.

Destination-wise, exports to India and other countries decreased 6.2 percent and 2.0 percent respectively, whereas exports to China increased 232 percent. Exports of zinc sheet, particle board, juice, polyster yarn and thread, and readymade garments among others increased whereas exports of palm oil, soyabean oil, woolen carpet, tea, jute goods among others decreased.

Similarly, during the nine month of 2023/24, merchandise imports decreased 2.8 percent to Rs.1167.37 billion compared to a decrease of 18.1 percent a year ago.

Destination-wise, imports from India and other countries decreased 3.2 percent and 22.6 percent respectively while imports from China increased 33.4 percent. Imports of transport equipment, vehicle and other vehicle spare parts, readymade garments, aircraft spareparts, electrical equipment, textiles among others have increased whereas imports of gold, crude soyabean oil, crude palm oil, petroleum products, rice/paddy among others have decreased.

Based on customs points, exports from Bhairahawa, Dry Port, Jaleswor, Kanchanpur, Krishnanagar, Mechi, Rasuwa and Tatopani have increased whereas exports from all the other major customs points have decreased in the review period. On the import side, imports from 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 2.8 percent to Rs.1053.42 billion during the review period. Such a deficit had decreased 17.1 percent in the corresponding period of the previous year. The export-import ratio remained at 9.8 percent in the review period same as in the corresponding period of the previous year.

Custom-wise Foreign Trade

The custom-wise foreign trade in the nine 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 7633.3 10228.1 34.0 180105.0 179750.4 -0.2
2 Biratnagar Customs Office 31180.2 23156.9 -25.7 141158.3 126673.5 -10.3
3 Birgunj Customs Office 29197.3 22630.0 -22.5 443724.6 402103.3 -9.4
4 Dry Port Customs Office 3241.7 3506.8 8.2 152358.8 156169.1 2.5
5 Jaleshwor Customs Office 892.1 3369.3 277.7 6190.9 7500.2 21.1
6 Kailali Customs Office 657.8 512.7 -22.1 19850.4 16897.2 -14.9
7 Kanchanpur Customs Office 11.9 15.0 26.5 1080.9 1312.0 21.4
8 Krishnanagar Customs Office 1102.6 1823.7 65.4 14669.8 15919.9 8.5
9 Mechi Customs Office 16031.5 18590.0 16.0 35404.3 32911.5 -7.0
10 Nepalgunj Customs Office 1806.3 1761.9 -2.5 49736.1 53087.2 6.7
11 Rasuwa Customs Office 215.1 1428.4 19515.3 38475.0 97.2
12 Tatopani Customs Office 0.0 7.2 8628.9 26631.1 208.6
13 Tribhuwan Airport Customs Office 26219.3 25608.0 -2.3 119881.0 102622.2 -14.4
14 Others 90.9 1308.0 9204.8 7317.3 -20.5
Total  118280.0 113946.0 -3.7 1201509.0 1167369.8 -2.8

Source: Based on customs data

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