NRB permits export loan in foreign currency

KATHMANDU, AUG 13: 

Exporters can now obtain pre-shipment and post–shipment loans from financial institutions in foreign currency.

The central bank has allowed commercial banks and development banks to lend $ 1 million or its multiple as pre-shipment and post–shipment loans to export-oriented industries that earn foreign currency. The borrowers need to pay both the principal amount and interest in foreign currency.

The central bank already allows banks to provide exporters and hydro projects loans in foreign currency. The move comes in line with the monetary policy for this fiscal year that had announced such a facility to encourage export industries as they need to make payments for raw materials in foreign currency and then receive payments in foreign currency.

Nepal Rastra Bank (NRB) has fixed a maximum of 2.25 per cent addition to LIBOR. LIBOR stands for London Inter Bank Offer Rate which is fixed by leading London banks and is the benchmark for bank rates all over the world.

Moreover, NRB will also provide refinancing to the financial institutions for such loans at LIBOR plus 0.25 per cent interest rate for six months against the collateral of good loans, according to the circular published today. The banks need to pay back the refinanced loans in foreign exchange.

Last fiscal year, the central bank had allowed licensed hydropower companies to issue foreign-currency debentures in Nepal.

The hydro power projects that generate income in foreign currency can raise needed funds for developing a project by issuing foreign-currency bonds through the subsidiary merchant banking arm of commercial banks and development banks.

Himal Power Company has already undertaken preliminary steps to issue $60 million worth debentures in the domestic financial market.

Source: THT

American Dollar Highest against NC

Rupee plunges to all-time low against US dollar

KATHMANDU, MAY 18, 2012


The Nepali rupee touched the lowest level against US dollar on Friday as the central bank determined the selling price of per dollar at Rs 87.40 surpassing 86.39 — much lower than the previous record of Rs 86.37 on Dec 16, 2011.

The fall of the rupee against the dollar is mainly due to the sharp devaluation of the Indian currency, with which the domestic currency is pegged. The Indian currency touched  its record low value against the dollar on Friday and so, the NRB fixed the record low value of domestic currency against the dollar.

A senior NRB official said that there is a little chance of deviation while fixing value of the Nepali currency against dollar compared to the Indian currency value against the greenback. “We determine the value of Nepali currency against dollar on the basis of the value of Indian currency at around 11am every day,” said the central bank official. “That’s why there remains a little chance of marginal deviation.”

The partially convertible Indian rupee fell to a record low of 54.60 against a dollar in the intra-day, surpassing Wednesday's low of 54.52. Indian media have blamed  worsening global risk environment and concerns about India’s fiscal and economic challenges for the weakening Indian currency.

But Indians living abroad are rushing to send money home as they see an opportunity to get more value of their foreign cash get higher return in their homeland. some Indians working abroad say their relatives will receive a bigger amount of rupees for the same usual amount that they transfer regularly.

NRB officials say that the depreciation of domestic currency is good for the export but it will increase the cost of third-country imports as more domestic currency is required to support import bills. Importers are also hesitant to make decision on import due to strengthening of the dollar against the Nepali currency.

An importer dealing with electronics said that he is facing difficulty making a decision as importing electronics at high cost may not be wise given the intense competition in the market. “Those who have stocks of materials imported at cheaper rate may attract more customers while those paying high have to suffer,” said the trader.

With imports from third countries accounting for around 33 percent of the total imports, the economy may face inflationary pressure. Nepal imported goods worth Rs 261.63 billion from India in the last fiscal, while those from third countries stood at Rs 133.27 billion. As Nepali industries import raw materials from India by paying US dollars, they will have to bear additional burden.

However, the rising number of migrant workers are likely to send more remittance when the Nepali currency is weak.

The weakening rupee also means the Nepal Electricity Authority will have to pay more for electricity from Bhotekeshi and Khimti hydropower projects, both of whom have power purchase agreements in dollars. Nepal will also have to pay more while repaying its external loans.

Source: The Kathmandu Post