As you have probably read, Sri Lanka is going through a difficult time financially. The country did not have enough foreign currency reserves to pay for its imports. This led to a shortage of things in the country.
Nepal
On April 10th, the Central Bank of Nepal, known as the Nepal Rastra Bank, instructed banks to not issue money for non essential imports. This was because the foreign currency reserves of Nepal were running low. Non-essential imports are imports that are not really necessary for the day to day lives of people.
The government of Nepal has an internal limit that forex reserves must always be enough to pay for at least 7 months of imports. On April 10th, the level of forex went below that level. The Central bank took immediate action.
India is Nepal’s largest trading partner. This means that the country with which Nepal has the highest foreign trade is India. This move will hit India’s exports to Nepal.
Pakistan
According to data released by Pakistan’s Central Bank (State Bank of Pakistan), liquid foreign exchange reserves are at 17,028 million. For the last 4 weeks at least, they have been consistently dropping.
India
India has been slowly building up its forex reserves. The reserves reached an all time high of USD 642.453 billion in the week ending September 3rd, 2021. India’s national bank, the Reserve Bank of India, releases data of India’s forex reserves once a week.
According to this information, India’s forex reserves stand at 537 billion USD as on April 8th, 2022. This is the 6th consecutive (continuous) week of falling forex reserves.
The Reserve Bank does not share reasons for fall in reserves.
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