The strong dollar helped pile up cash coming home from migrant workers abroad. However, the effect seems to have worn off in terms of boosting exports. 

 

In just two months, Nepal received one-fifth of the annual remittance receipt of last year as the strong dollar increased the inflow of money home from migrant workers abroad.

 

Nepali workers abroad sent home Rs 88.04 billion in the first two months of the current fiscal year, according to Nepal Rastra Bank’s macroeconomic statistics. The annual remittance income of the last fiscal year stood at Rs 434.6 billion. 

 

The review period saw remittance growing at 34.7 per cent between mid-July and mid-September. The US dollar had appreciated by almost 10 per cent during the period that accelerated the rate of money being sent home. More workers were taking advantage of the appreciation in the value of their money due to the strong dollar. 

 

Likewise, with Dashain around the corner, inflow of money got better as shown by the increment of remittance in US dollar terms as well. According to the central bank statistics, worker remittance increased by 19.6 per cent to $880.6 million in the review period as compared to an increase of 13.2 per cent in the same period of the previous year.

 

Despite the strong dollar, merchandise exports went up by only 8.6 per cent to Rs 15.16 billion in the two months of the current fiscal year. Such exports had increased by 11.9 per cent to Rs 13.97 billion in the same period of the previous year. 

 

Theoretically, a strong dollar should have boosted exports as the weak Nepali rupee meant cheaper Nepali merchandise in the foreign market. Exports to other countries declined by 4.8 per cent in the review period in contrast to an increase of 34 per cent in the same period last year. In US dollar terms also, exports to other countries declined by 15.3 per cent to $56.8 million in contrast to an increase of 9.7 per cent during the corresponding period of the previous year.

 

“However, exports to India went up by 18.5 per cent during the review period, due to the increase in export of zinc sheet, juice, cardamom, Ayurvedic medicine and shoes, among others,” says the report.

 

On the other hand, the strong dollar that made imported items expensive seems to have discouraged imports. Merchandise imports grew by 12.1 per cent to Rs 101.66 billion, while such imports had gone up by 29.7 per cent to Rs 90.65 billion in the same month of the previous year.

 

Imports from other countries increased by only 2.3 per cent in the review period compared to a high growth of 26.7 percent in the same period last year. In US dollar terms, imports from other countries decreased by 8.8 per cent to $343.9 million in contrast to an increase of 3.7 per cent in the same period of the previous year.

 

Due to low growth in imports, the total trade deficit grew by 12.8 per cent to Rs 86.5 billion compared to an increase of 33.5 per cent in the same period of the previous year. Likewise, the export to import ratio also declined to 14.9 per cent by mid-September that was at 15.4 per cent in the first month.

 

The overall Balance of Payments (BoP) recorded a surplus of Rs 33 billion during the two months compared to a surplus of Rs 5.52 billion during the same period of the previous year. 

 

Inflation at 8pc

 

KATHMANDU: The year-on-year inflation as measured by the consumer price index stood at eight per cent in mid-September 2013 as compared to 11.2 per cent in the corresponding period of the previous year. The indices of food and beverages group, and non-food and services group increased by 9.4 per cent and 6.8 per cent, respectively. Such indices had increased by 10.4 per cent and 11.9 per cent, respectively, in same period of last year.