NRB injects liquidity worth over Rs 22b

Kathmandu, March 30:

In the first six months of the current fiscal year 2005-06, Nepal Rastra Bank (NRB), the central bank of the country, has injected net liquidity equivalent to Rs 22.5 billion through its intervention in the foreign exchange market.

According to a NRB statement released today, the central bank intervened in the foreign exchange market twenty times to purchase US dollars and two times to sell it. The central bank said it injected total liquidity equivalent to Rs 23.2 billion into the banking system and through sale intervention, NRB mopped up liquidity worth Rs 0.65 billion. Due to inflow of workers’ remittances from abroad through banking channel, NRB had to buy US dollars in most of the interventions, said the statement.

Net foreign assets remained as a dominant source in the six months of the current fiscal which grew by a higher rate of 9.7 per cent (Rs 10.5 billion) compared to a growth of 4.9 per cent (Rs 5.3 billion) in the same period in the last fiscal. The growth in domestic credit declined to 4.3 per cent in the current fiscal compared to a growth of 5.7 per cent in the previous year. Money supply in this period also remained at 4.6 per cent only compared to a higher growth of 11.5 per cent in the previous fiscal year, said the NRB report.

The average growth rate of price index from mid-February 2005 through mid-January 2006 also stood at seven per cent. The price index of food and beverages group moved up by 8.2 per cent compared to an increase of 3.4 per cent in the same period of the previous year.

The rise in the prices of gr-ains and cereal products, ve-getable and fruits, restaura-nts meals, pulses and bevera-ges pushed up the index of this group. The indices of gra-ins and cereal products (13.3 per cent), pulses (9.2 per ce-nt), beverages (8.7 per cent), vegetables and fruits (8.1 per cent) and restaurants meals (7.9 per cent). Government expenditure posted a growth of 17.7 per cent in the review period compared to a growth of 6.3 per cent last year.