During the first four months of the current fiscal year, a total of US $ 1.36 billion was spent to buy Indian currency (INR) to support imports from the southern neighbor, despite the country’s already depleted foreign currency reserves. It was about 12% greater than the amount spent for the same reason during the previous fiscal year’s review period.
According to the Nepal Rastra Bank’s (NRB) ‘Current Macroeconomic and Financial Situation’ report, the aforementioned amount of USD was offloaded to the Reserve Bank of India to acquire the INR equivalent of Rs 161.84 billion. The central bank sold USD 1.22 billion to buy INR worth Rs 144.69 billion between mid-July and mid-November last year.
Every year, the central bank must sell a huge quantity of USD to buy Indian currency in order to manage sufficient finances to import goods from the country. According to NRB figures, India accounted for 59 percent of total imports worth Rs 650.29 billion.
Nepal purchased commodities worth Rs 385.95 billion from India alone during the review period, a 46.1 percent rise. With its biggest commercial partner, India, the landlocked country has a trade imbalance of Rs 319.01 billion.