KATHMANDU, May 26 (Xinhua) -- Nepal's foreign exchange reserve has been decreasing over the last three months, impairing the Himalayan's country's capability to finance imports, Nepal's Rastra Bank (NRB) has said.

The Nepali central bank said in its third quarterly review of monetary policy released on Friday that the massive expansion of imports, outflow of dividends by the foreign investors and slow growth of remittance contributed to decreased foreign exchange reserves.

According to NRB, Nepal's foreign exchange reserves decreased to 10.16 billion U.S. dollars in mid-April this year from 10.31 billion U.S. dollars in mid-July 2017 when the Nepal's fiscal year began.

As a result, the latest reserve is enough to sustain imports of goods and services for 9.7 months in mid-April down from 11.4 months in mid-July last year.

After years of consistent growth in foreign exchange reserves fueled by rising remittance, foreign exchange reserves started to drop since mid-January this year.

"We are not worried about current drop in foreign exchange reserves as our target is to keep such reserves to sustain the imports of goods and services for at least eight months," Nara Bahadur Thapa, executive director of the NRB told Xinhua on Friday. "But, the situation may worsen provided the import continues to surge and remittance growth continues to slow and export does not grow as required."

According to NRB data, Nepal's merchandise imports grew by 25 percent to 8.36 billion U.S. dollars as of first nine months of the current fiscal while the country's exports rose by 14.1 percent to 662 million U.S. dollars as of first nine months of the current fiscal.

Nepal received remittance 5.23 billion U.S. dollars during the same period with a rise of 9.6 percent against the same period last fiscal. This shows heavy reliance on remittance for Nepal's import financing with tourism contributing only 481 million U.S. dollars.

After consistent decease in remittance in the early months of the fiscal year, inflow of remittance has started to rebound since mid-February this year, according to NRB.