Tuesday, November 6, 2018

Foreign exchange limit for outbound Nepalis lowered to $1,500

The foreign currency exchange facility for a Nepali going for a foreign trip – except India – has been reduced to $1,500 from earlier limit of $2,500. The central bank has – issuing a directive today – reduced the maximum amount of foreign currency facility for a Nepali going abroad.
The commercial and development banks, authorised to sell foreign currency, can now sell only $1,500 per passport for a Nepali national going abroad, according to the central bank that has restricted the purchase of foreign currency due to foreign currency flight, and also depleting forex reserve. "The rising foreign currency flight is putting pressure on the foreign exchange reserves."
The rising income, in recent years, has fuelled the outbound travel – especially during long holidays – of Nepalis putting pressure on hard earned foreign currency that mostly comes in as remittance from the Nepali migrant workers.
The central bank has introduced the new rule to discourage the growing outflow of foreign currency on account of outbound tourism, according to the Forex Department of the central bank. In the last fiscal year of 2017-18, Nepalis spent Rs 79.6 billion in travel, some 40 per cent up from the amount two fiscal years ago, the department states. The country, however, earned Rs 177.47 billion in the fiscal year 2017-18 from foreign travellers coming to Nepal.
Likewise, the central bank has also reduced the limit on payments through Telegraphic Transfer (TT) to $30,000 from the earlier limit of $40,000.
The central bank has also raised the limit on loans for commercial banks from foreign banks to 50 per cent of core capital, up from 25 per cent to facilitate foreign currency borrowing by commercial banks. "The limit is being increased to facilitate the banks as they have not found possible lenders abroad due to low amount of borrowings," the central bank claimed.
The stronger dollar, in recent weeks, has also increased pressure on foreign exchange reserves. The US dollar has gone up nearly by 15 per cent from the beginning of the current fiscal year. A dollar costs Rs 117.3 today, up from Rs 102.5 on January 1.
According to the central bank, gross foreign exchange reserves has depleted to $9.75 billion as of mid-September 2018 from $10.08 billion as of mid-July 2018 also due weak Nepali rupee.

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