The remittance inflows to Nepal jumped by a record 20.4 percent to Rs378.04 billion during the first four months of the current fiscal year amid the world’s largest economies teetering on the brink of a recession triggered by inflation, latest data from the Nepal Rastra Bank showed.

The growth in remittances was attributed to the strengthening of the US dollar against the Nepali rupee.

The Nepali currency vis-à-vis the US dollar depreciated 1.51 percent in mid-November from mid-July. The buying exchange rate per US dollar stood at Rs129.46 in mid-November, compared to Rs127.51 in mid-July.

According to the country's central bank, in US dollar terms, the remittance inflows increased 10.8 percent to $2.93 billion in the review period, against a decrease of 7.3 percent in the same period of the previous year.

The number of Nepali workers (institutional and individual-new) taking approval for foreign

employment increased 102.5 percent to 195,196 in the review period. The number of Nepali

workers taking approval for foreign employment increased 46.4 percent to 87,428 in the review period.

Industry insiders say given the way Nepalis are moving abroad in search of jobs, Nepal may see nearly a million workers migrating overseas by the end of this fiscal year.

According to the World Bank, remittances to low- and middle-income countries may withstand global headwinds in 2022, growing at an estimated 5 percent to $626 billion.

A reopening of host economies as the Covid-19 pandemic receded, supported migrants’ employment and their ability to continue helping their families back home, the World Bank said. “Rising prices, on the other hand, adversely affected migrants’ real incomes.”

The multilateral funding agency said that the cost of sending $200 across international borders to least developed countries like Nepal remains high at 6 percent on average in the second quarter of 2022.

It is cheapest to send via mobile operators (3.5 percent), but digital channels account for less than 1 percent of total transaction volume, said the World Bank.

Digital technologies allow for significantly faster and cheaper remittance services. “However, the burden of compliance with Anti-Money Laundering/Combating the Financing of Terrorism regulations continues to restrict access of new service providers to correspondent banks,” the World Bank said. “These regulations also affect migrants’ access to digital remittance services.”

With Nepal’s external earnings growing and imports decreasing, the central bank said that Nepal’s economic and financial situation is improving.

The central bank said that the current account remained at a deficit of Rs35.40 billion in the review period compared to a deficit of Rs220.91 billion in the same period of the previous year.

The balance of payments (BOP) remained at a surplus of Rs20.03 billion in the review period compared to a deficit of Rs150.38 billion in the same period of the previous year.

Similarly, the gross foreign exchange reserves increased 2.5 percent to Rs1,246.27 billion in mid-November from Rs1,215.80 billion in mid-July.

In US dollar terms, the gross foreign exchange reserves increased 1.0 percent to 9.63 billion in mid-November from 9.54 billion in mid-July.

Based on the imports of four months of 2022-23, the foreign exchange reserves of the banking sector are sufficient to cover the merchandise imports of 9.7 months, and merchandise and services imports of 8.4 months.

During the first four months of the fiscal, the merchandise exports decreased 33.3 percent, amounting to Rs54.77 billion, against an increase of 104.3 percent in the same period of the previous year, the central bank said.

Destination-wise, exports to India and China decreased 42.3 percent and 34.2 percent

respectively, whereas exports to other countries increased 7.4 percent.

During the four months of 2022-23, Nepal’s imports decreased 18.1 percent, amounting to Rs532.69 billion against an increase of 61.6 percent a year ago. Destination-wise, imports from India, China and other countries decreased 16.5 percent, 20.9 percent, and 20.1 percent, respectively.

The year-on-year consumer price inflation remained at 8.08 percent in mid-November, compared to 6.04 percent a year ago. Food and beverage inflation stood at 7.38 percent, whereas the non-food and service inflation rose to 8.63 percent in the review month, said the country’s apex bank.