May 18, 2020 | Investopaper
Remittances from abroad have declined sharply in Chaitra. In the previous eight months of the current year, Nepal received an average of Rs 74 billion in remittances, but only Rs 34.48 billion was received in the month of Chaitra. That’s a drop of about 55 percent. This is still a high rate of decline compared to Falgun which received Rs 79.2 billion in remittances.
Remittance income was expected to fall sharply from Chaitra as the effects of the global corona virus epidemic began to grow. NRB also said that international trade has shrunk along with remittances. Similarly, government revenues and expenditures have also been affected by the Corana virus, which has pushed the country’s economy, which has been growing at 7 percent, to 2 percent in the third quarter, NRB said.
New data shows that inflation has increased. The average rate of inflation has risen to 6.74 percent in Chaitra. Such growth rate was 4.44 percent during the same period last year. Prices of vegetables, fruits, pulses and nuts have also gone up in Chaitra.
Until the end of Chaitra, Nepal has sold goods worth Rs 78.82 billion and bought goods worth Rs 982.53 billion from foreign markets. Even after the policy reform to control the flow of people abroad, the amount of money spent by Nepalese abroad has increased more than the amount spent by foreigners in Nepal. However, the pace of inflows has been higher than the outflows.
Until Chaitra end, the BOP stood at a surplus of Rs 36.61 billion, according to NRB. However, the foreign exchange reserves are stronger than ever. Imports of everything from industrial raw materials to materials ordered by large development projects have declined since the Corona epidemic began. Despite the sharp fall in the price of petroleum products, the country’s imports have declined by 7.5 percent over the previous year. This has affected the foreign exchange reserves.
As of Chaitra, Nepal has foreign exchange reserves of Rs 1,155.90 billion, according to Nepal Rastra Bank. With this money, it is seen that in the current situation, imports can be made for nine and a half months only. However, the rise in the US dollar and gold prices in the international market has also led to higher levels. As Nepal has also invested in dollars and gold, the Nepali conversion of such investment has now become expensive. If the dollar depreciates in the coming days and oil prices rise, the country will not be able to maintain this level of import capacity.