Forex reserves swell

Kathmandu, March 10:

The central bank has confortable forex reserve that can finance merchandise imports of almost a year.

“The current level of reserves are sufficient for financing merchandise imports of 11.4 months and merchandise and service imports of 9.1 months,” according to the current macro-economic report published by the central bank and based on the first six months of the current fiscal year.

In mid-January 2009 the gross foreign exchange reserves aggregated Rs 254.5 billion, an upsurge by 19.7 per cent compared to the level as at mid-July 2008.

The central bank in its report said that in the corresponding period of last fiscal year, such reserves had declined by 0.2 per cent.

On the basis of US dollar, gross foreign exchange reserves rose by 5.5 per cent to $3.27 billion in the first six months of this current fiscal year, said the report of the Nepal Rastra Bank (NRB). Such forex reserves had increased by 2.9 per cent in the same period in the last fiscal year.

Remittance is one of the key component in the increment in forex reserve. It contributes to 50 per cent of the total foreign currency earnings contrary to a popular belief that tourism, carpet

or the readymade garments (RMG) sector is the largest foreign currency earner.

The report claimed that the migrant workers’ remittance has also increased by 65.3 per cent in the first six months of 2008-09 compared to the growth of 18.2 per cent in the

corresponding period of the previous year.

The global crisis hit major Nepali migrant labour destination countries, if start to decrease Nepali labour force then the remittance might see a fall in the coming months hurting the forex reserves.