Central Bank absorbs NPR 4.476 trillion liquidity as excess liquidity accumulates in the banking system.

Nepal Rastra Bank (NRB) has absorbed NPR 4.476 trillion worth of liquidity in the month of Shrawan alone due to the excess liquidity accumulated in the banking system. The central bank absorbed this amount using deposit collection instruments and the permanent deposit facility during the first month of the fiscal year.

Key Details:

• Through Deposit Collection Auction: NPR 87.80 billion in liquidity absorbed.

• Through Permanent Deposit Facility: NPR 4.3865 trillion in liquidity absorbed.

In comparison, during the same period last year, the central bank had injected NPR 236.29 billion in liquidity through overnight liquidity facilities and permanent liquidity facilities. This year, however, a significant amount of liquidity has been absorbed to manage the excess liquidity in the banking system.

Central Bank's Activities in the Foreign Exchange Market:

• Purchase of US Dollars: USD 413.4 million purchased, leading to the injection of NPR 55.42 billion in liquidity.

• Sale of US Dollars: USD 341 million sold, leading to the purchase of INR 45.71 billion worth of Indian Rupees.

Compared to last year, the central bank has injected less liquidity into the foreign exchange market this year. Additionally, the purchase of Indian Rupees has been more substantial. This policy by the central bank aims to bring stability to the banking system and effectively manage liquidity.