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Kathmandu Saturday January 13, 2001 Paush 29, 2057.
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NRB intervenes in forex market
Post Report
KATHMANDU, Jan 12 - Propelled by slumping demand for US dollars, Nepal Rastra
Bank (NRB) intervened and procured US $ 18 million (equivalent to Rs 1.33 billion) from
the forex market today.
This is the second time within a month that NRB intervened in the market. The
central bank on December 21 had secured US $ 23.5 million (Rs 1.74 billion).
The purchases were made at the rate of Rs 74.30 per US dollar, informed
Foreign Exchange Dealers’ Association (FEDAN). However, commercial banks sell dollars
to public at Rs 74.65, which at the same time is obtained at Rs 73.95 from the central
bank.
According to an official at Forex Department of NRB, the central bank was
compelled to intervene due to the excess liquidity existing in the market. The
intervention was made only after FEDAN requested the central bank, according to the
official.
FEDAN last Tuesday had requested NRB to absorb US 20 million from the market.
"Declining demand for the greenback is the sole reason why FEDAN requested NRB to buy
dollars," said Pramod Rizal, president of FEDAN.
Rizal said that stability of the Indian currency, which has a fixed exchange
rate with Nepali rupee, against the dollar and declining interest rate in the US are other
reasons behind adequate dollar holdings of commercial banks.
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