Nepal’s foreign exchange reserves have reached a new high of $13.89 Billion OR NPR 19 KHARBA , according to figures issued by the Nepal Rastra Bank (NRB) in May 2024. This marks an 18.6% increase from the previous year.
The increase in foreign reserves can be attributable to numerous sources, including:
Increased Remittances: Remittances from Nepali migrant workers overseas remain a significant source of foreign cash for Nepal. Nepal Rastra Bank stated 19% increase in remittance compared to previous year.
Improved Tourism Sector: Following the COVID-19 pandemic, Nepal’s tourism business has begun to recover. Tourist arrivals by air have surged by 33.78% in the first quarter of 2024 and has been increasing since.
Prudent Monetary Policy: The NRB has pursued a prudent monetary policy, which has contributed to the stability of the foreign exchange market and encouraged foreign investment.
The restriction on expensive items such as cars and mobile phones has also helped Nepal protect its foreign reserves from overspending.
Nepal relies heavily on external factors such as remittances for its foreign reserves. Remittances are not a sustainable method of managing foreign reserves. They can fluctuate at any time. Instead, the government should concentrate on increasing exports from our own country. There is a significant difference between import and export. Nepal experienced a trade deficit of 14.54 kharba in the fiscal year 2079/80.
Looking ahead
The future trajectory of Nepal’s foreign reserves will be determined by a number of factors, including the global economic climate, remittance flows, and tourism industry performance. The government’s ability to manage its budget and implement sound economic policies will also be important.
