Foreign exchange reserve declines

The gross foreign exchange reserve has declined in the first eight months, according to the central bank.
“The gross foreign exchange reserves declined by 4.4 per cent to Rs 257.05 billion in mid-March from a level of Rs 268.91 billion as in mid July 2010,” the central bank data revealed, adding that such reserves had decreased by 14.7 per cent to Rs 244.29 billion in the same period last fiscal year.
On a monthly basis, foreign exchange reserve of Rs 761.6 million declined in the month of February-March from the level of previous month of this year. Out of the total reserve, Nepal Rastra Bank’s reserves declined marginally by 2.7 per cent to Rs 199.86 billion from a level of Rs 205.37 billion as at mid-July 2010.
The gross foreign exchange reserves in the US dollar terms also declined by 1.3 per cent to $3.57 billion in mid-March 2011. “Such reserves had decreased by 8.1 per cent in the same period last year,” the report added. Based on the trend of import during the eight months of the current fiscal year, the current level of reserves is sufficient for financing merchandise imports of 8.3 months and merchandise and service imports of 7.1 months, according to the central bank that has termed the forex reserve situation comfortable as it is more than normal reserve that is needed for the import.
However, the central bank purchased Indian currency equivalent to Rs 117.97 billion through the sale of $1.62
billion in the Indian money market. “Indian currency equivalent to Rs 101.80 billion was purchased through the sale of $1.35 billion in the same period of the previous year,” said the central bank that has injected net liquidity of Rs 108.93 billion through the purchase of $1.50 billion from foreign exchange market (commercial banks).