Forex reserve on upward trajectory

Forex reserve on upward trajectory
eKantipur.com, 9-Apr-08

The foreign currency reserve rose by nearly 10 percent in the first two quarters of the current fiscal year propelled by a steady flow of remittance.

The latest data of Nepal Rastra Bank (NRB) shows that Nepal's hard currency stash totaled Rs 182.38 billion in mid-March, up from Rs 166 billion in mid-July.

Economists said the increment in the foreign exchange reserve was a stimulating factor for the economy. The jingling cash box puts the country in a comfortable position to meet debt servicing obligations and pay its import bills, they said.

The experts added that when the foreign exchange reserve goes up, foreign investors feel more secure that they will be able to repatriate their profits without problems.

Nepal has amassed Rs 171.8 billion in convertible currencies (all currencies except the Indian rupee) and Rs 10.5 billion in Indian rupees.

Of the total foreign currency reserve, the central bank holds Rs 145.12 billion while the commercial banks have Rs 34.33 billion.

The central bank has purchased Indian currency equivalent to Rs 58 billion to meet the expanding demand for rupees.

An NRB official said the enlargement of the foreign exchange reserve would keep the economy stable even during difficult times.

The money in the bank will allow the country to liberalize the economy by relaxing its monetary and fiscal policies and promote growth and create employment, he added.

The official said that the increase in forex holdings justifies maintaining the pegging regime with India as the flow of foreign currency there has been rising steadily.

“When we were running short of Indian currency, we were able to obtain it by trading US dollars as we were in comfortable position in terms of our greenback reserve,” he said.

He added that if a conducive atmosphere for development emerged, the government could also use the reserve to develop infrastructure.