The Nepal Rastra Bank has injected net liquidity of Rs 6.64 billions through net purchase of 101.5 million US dollar from commercial banks by way of foreign exchange intervention in the review period, a report released by Finance Ministry said.
In the previous year, net liquidity of Rs 11.29 billion was injected through net purchase of 151.4 million US dollar from commercial banks.
According to the report, Indian currency equivalent to Rs 11.71 billion has been purchased through a sale of 180 million US dollar in the review period. Last year, such purchase had amounted to Rs 8.19 billion by selling 110 million US dollar. The purchase of IC went up in the review period due to widening trade deficits with India.
Similarly money supply record shows 1.8 percent growth of Broad Money (M2) in the first two months of 2007/08. The growth of M2, in the same period of the previous year was also 1.8 percent. On the other hand, Narrow Money (M1) declined by 3 percent in the review period compared to a decline of 2 percent in the previous year.
However, compared to a growth of 3.7 percent in the previous year, time deposit grew by 4.1 percent in the review period.
According to the report, net foreign assets (NFA), after adjusting foreign exchange valuation gain/loss, declined by 2 percent (Rs 2.7 billion) in the review period compared to a growth of 0.5 percent (Rs 0.75 billion) last year. The widening trade deficits contributed to a decline in NFA in the review period.
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