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The investment limit for banks and financial institutions licensed to transact convertible foreign currency has been increased, boosting their income and profits. Banks can now invest up to 20 percent of their primary capital in proprietary derivatives transactions, including both the purchase and sale of outstanding amounts. Previously, the limit was 15 percent. Nepal Rastra Bank’s Department of Foreign Exchange Management amended the Unified Circular, raising the limit by five percent.

Licensed ‘A’ category banks must manage their convertible foreign currency investments and mitigate exchange rate risks while ensuring transactions do not involve speculation. Total foreign exchange reserves are held by Nepal Rastra Bank and commercial banks. Increasing foreign exchange investment in banks will enhance their income and profitability, says Ramu Poudel, spokesperson for Nepal Rastra Bank. “Foreign exchange flows into banks, and they are now allowed to invest up to 20 percent of their primary capital. This increase from the previous 15 percent cap will help banks generate higher income and profits,” Poudel told ApEx.

With this change, the central bank will no longer need to absorb excess foreign exchange from the market. The total foreign exchange remains the same, but the portion previously held by Nepal Rastra Bank will now be available to commercial banks. Additionally, banks cannot hold open positions in derivatives transactions; all positions must be squared up. The exposure of such transactions must be reported in convertible foreign exchange, and proprietary transactions cannot exceed a three-month period. If foreign exchange outflows occur while reconciling net accounts, the central bank must be informed as per existing regulations.

This provision also governs foreign exchange balances and derivative instruments that banks and financial institutions can maintain in agency banks abroad. Licensed ‘A’ category banks and national-level ‘B’ institutions may engage in derivatives transactions within the foreign exchange market, following policy criteria set by their boards of directors. They are also permitted to invest convertible foreign exchange balances in their foreign agency banks.

The price of gold has increased by Rs 300 per tola in the domestic market on Thursday.

According to the Federation of Nepal Gold and Silver Dealers’ Association, the precious yellow metal is being traded at Rs 170, 900 per tola today. It was traded at Rs 170, 400 per tola on Wednesday.

Similarly, the price of silver has increased by Rs 35 and is being traded at Rs 1, 985 per tola today.

The Nepal Stock Exchange (NEPSE) plunged by 25. 16 points to close at 2, 821. 13 points on Wednesday.

Similarly, the sensitive index dropped by 5. 70 points to close at 469. 56 points.

A total of 23,343,201-unit shares of 308 companies were traded for Rs 10. 97 billion.

Meanwhile, Samaj Laghubittya Bittiya Sanstha Limited (SAMAJ) and Guardian Micro Life Insurance Limited (GMLI) were the top gainers today with their price surging by 10. 00 percent. Likewise, Green Development Bank Ltd. (GRDBL) was the top loser with its price dropped by 6. 84 percent.

At the end of the day, the total market capitalization stood at Rs 4. 68 trillion.

The Nepal Electricity Authority (NEA) has prioritized the construction of pumped storage hydropower projects to manage daily electricity demand fluctuations and enhance the country’s energy security. The NEA’s Project Development Department has identified 156 potential pumped storage projects nationwide.

Of these, 33 projects with a combined capacity of 42,000 MW have been shortlisted and categorized. A feasibility study is underway for a 332 MW pumped storage project in Syarphu Lake, Rukum (West), after obtaining a survey permit. Additionally, the 670 MW Dudhkoshi Reservoir Hydropower Project is studying a 200 MW pumped storage component.

A feasibility study is also being conducted for the 1,596 MW Hulingtar-Dukim Pumped Storage Project in Dhading’s Benighat Rorang and Chitwan’s Ichhakamana rural municipalities. Located near Kathmandu, this project benefits from access to roads, transmission lines, and other necessary infrastructure. The NEA’s Project Development Department is currently conducting a Detailed Engineering Study (DEX) for the project.

The project involves constructing two reservoirs by building 45-meter and 103-meter-high dams on the Hugdi (upper) and Mowa (lower) rivers, respectively. The power plant will be situated on the Mowa River. Electricity will be generated using water stored in the Hugdi reservoir, and after generation, the water will be pumped back from the Mowa reservoir to Hugdi. The project is designed to operate at full capacity for six hours during peak demand periods.

Pumped storage projects store water in an upstream reservoir during off-peak hours when energy prices are low. This stored water is later used to generate electricity during peak hours when demand and prices are higher. These projects play a crucial role in power system stability, peak demand management, and surplus energy utilization. They also enable Nepal to generate and consume electricity efficiently while exporting surplus energy to India at premium rates during peak periods.

On Saturday, NEA Executive Director Kulman Ghising, Project Development Director Nasibman Pradhan, and other officials inspected the Hulingtar-Dukim project site. Ghising highlighted the project’s advantages over others due to its strategic location, favorable environmental and social conditions, accessibility, infrastructure availability, and proximity to transmission lines and power demand centers.

Ghising stated that the project would initially be developed with a capacity of 510 MW in the first phase, eventually expanding to full capacity. “The process of obtaining a survey permit will be prioritized to accelerate construction,” he said. The project is expected to generate approximately 3.36bn units of electricity annually, with an estimated cost of $587,000 per megawatt.