NRB to bring $10m in cash from SingaporeNepal Rastra Bank (NRB) is bringing in $10 million in cash from Singapore to meet the growing demand for physical dollar in the domestic market.
Nepal Rastra Bank (NRB) is bringing in $10 million in cash from Singapore to meet the growing demand for physical dollar in the domestic market.
A decision in this regard was taken by a meeting of NRB’s management committee headed by Governor Chiranjibi Nepal this week.
The dollar will be brought into Nepal within the next two months, according to NRB Deputy Spokesperson Rajendra Pandit. “We had to resort to this measure because physical dollar hasn’t entered into NRB’s system for the last seven months,” Pandit told the Post. “While the supply of the greenback has petered out,
demand for physical dollar is growing every day.”
Physical dollar is mainly demanded by army personnel who take part in the United Nation’s peace operations abroad, officials working for foreign diplomatic agencies and multilateral agencies, students pursuing studies abroad, Nepali overseas travellers and entrepreneurs, among others.
NRB probably would not have to bring in dollar from Singapore had those going abroad used dollar-denominated electronic cards. “But Nepalis prefer to travel around with cash, and we can’t help it,” said Pandit.
While Nepalis going abroad demand physical dollar, international travellers have started visiting Nepal with electronic cards, reducing the supply of physical dollars in the country. Also, NRB is suspicious about activities of money exchange kiosks and businesses engaged in travel trade, such as hotels and travel agencies, as “they have not been sending dollars to NRB”.
As supply of physical dollar has dropped, NRB currently has stock to cater to the demand of the next four to six months only. NRB hopes the cash consignment being brought in from Singapore will help it meet dollar demand of another four to six months.
NRB will be tapping its account in CIMB Bank, Singapore, to ferry dollars to the country. “Although we are bringing in our own money, we still have to sign an agreement with the Singaporean bank, because no bank supplies
physical dollar of such a big amount,” Pandit said. “The agreement will be signed right after the Dashain festival.”
NRB may have to spend around $20,000 in freight and insurance costs to bring in the US dollars. This means cost of ferrying every dollar will stand at 0.2 cents,
or 20 Nepali paisa. “However, we will not transfer this burden to those who purchase US dollars here,” Pandit said.
NRB has also asked private banks interested in bringing in physical dollar from abroad not to add cost incurred in ferrying the greenback to the exchange rate they fix.
“At present, selling rates
of US dollars-or the price at
which banks sell dollars to
customers-is around 60 paisa
higher than buying rates-or the price at which banks buy dollars from customers. If banks bring in greenback from abroad, it will
cost them 20 paisa per US dollar, which means their profit margin will go down by 20 paisa. Banks will have to deal with this issue till the time supply normalises,” an official of NRB said on condition of anonymity.
Currently, banks like Standard Chartered, Nabil and NMB, among others, have sought NRB’s permission to bring in dollar from abroad.
Bankers that the Post talked to, however, said they would not be interested in ferrying dollars from abroad if they are not allowed to pass the financial burden to those buying the greenback.