August 14, 2022, Sunday
Nepal 1:37:26 pm

NRB steps up to mitigate forex reserve risk

The Nepal Weekly
December 7, 2021

Nepal Rastra Bank, the central bank of Nepal has made an amendment to the Unified Directive- 2076 related to the trading of foreign currency. The amendment was driven by the depletion of foreign exchange in recent time. The gross foreign exchange reserve decreased by 5.7 per cent to Rs. 1319.31 billion in mid-October 2021 from Rs. 1399.02 billion in mid-July 2021, according to a recently published the quarterly review of the NRB.

The current monetary policy aims to strike a balance of foreign exchange reserve sufficient for importing goods and services for at least seven months. The quarterly review revealed that foreign exchange reserve has been continuously declining and now it has shrunk to imports for the next 7.8 months.

To mitigate the external sector shock, the NRB has simplified the deposit collection process from the Non-Residential Nepali and from the foreign institutions where Nepalis work. The current limit of 30 per cent of the paid-up capital in the non-deliverable forward trade has been reduced to 15 per cent limit.