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Nepal’s commercial banks have made a significant move by lowering their base interest rate to as low as seven percent. This decision comes as a result of slow loan demand and excess liquidity in the market. The aim is to leverage this excess liquidity and stimulate borrowing to boost overall economic growth.

Data from 20 commercial banks shows a steady decrease in base interest rates, with an average drop to 8.53 percent this month from 9.69 percent in January. Nepal Rastra Bank records reveal a significant difference between deposits and loans, with banks holding Rs 955 billion more in deposits than loans.

In another economic development, Nepal’s outstanding public debt has surged to nearly Rs 2.4 trillion, increasing by Rs 98 billion in the last 10 months of the current fiscal year. This increase, driven by both internal and external borrowing, poses significant fiscal challenges that need to be addressed through strategic debt management and fiscal reforms.

On a positive note, the Nepal Stock Exchange (NEPSE) experienced a significant surge of 112.73 points last week, resulting in investors gaining Rs 178 billion. This upward trend was attributed to Nepal Rastra Bank’s revision of the monetary policy and the reduction of interest rates on loans against shares by banks.

Furthermore, the foreign exchange market in Nepal remains stable, with exchange rates for major currencies like the US Dollar, Euro, Pound, and Dinar remaining unchanged. This stability indicates a steady currency market for these foreign currencies in Nepal.