The inflow of remittance and foreign direct investment (FDI) surged during the first month of the current fiscal year, Nepal Rastra Bank (NRB) said.

According to the monthly macro economic report published by the central bank on Friday, remittance inflows jumped 26.3 percent to Rs53.27 billion. During the same period in the last fiscal year, growth had reached a minuscule 0.8 percent.

Likewise, FDI inflows surged to Rs44.3 million compared to Rs2 million recorded during the same period last year. Remittance is the single biggest source of financing for the country’s imports which have been ever increasing while exports have plunged.

Chief of the research department at the central bank Nara Bahadur Thapa said that the rise in remittance was due to a depreciation of the Nepali rupee against the US dollar and Nepali migrant workers sending back more money to rebuild their houses damaged by the earthquake.

NRB’s exchange rate for the US dollar on Friday was Rs105.12. Thapa said that a decreased outflow of migrant workers could have an adverse impact on remittance growth in the days to come. Migrant worker departures dropped 10 percent to 38,081 during the first month of the fiscal year.  

Remittance inflow was very poor during the first half of the last fiscal year. It later recovered after measures to control hundi were launched. The flow swelled to a torrent after the deadly earthquake of April 25 as expatriate Nepalis sent money home to reconstruct their damaged houses. This continued in the new fiscal year.

In the last fiscal year, remittance inflow had slowed as the money was diverted to fund gold smuggling into the country, according to NRB.

Gross transfers that include remittance, foreign grants and pensions surged 29.7 percent to Rs61.32 billion against a decline of 1.5 percent during the same period in the last fiscal. Meanwhile, FDI growth was minimal. Thapa said that until the inflow reaches Rs1 billion, the current flow of FDI was just insignificant.

Although remittance surged at the beginning of the current fiscal year, exports continued to fall.

According to the report, the country’s exports dropped 3.9 percent to Rs6.46 billion in the first month. At the same time, imports increased 7.2 percent to Rs62.58 billon.