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#NepalEconomy #ForeignReserves
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By Sandeep Chaudhary

Foreign Reserves Cross Rs. 2.95 Trillion: External Cushion Strengthens

Foreign Reserves Cross Rs. 2.95 Trillion: External Cushion Strengthens

Nepal’s foreign exchange reserves have reached an all-time high of Rs. 2.95 trillion as of mid-August 2025/26, reflecting a major improvement in the country’s external stability. According to the latest Nepal Rastra Bank (NRB)data, total gross foreign assets of the banking sector rose by 4.7% in just one month, driven by remittance inflows, a current account surplus, and higher official reserves.

The NRB alone holds Rs. 2.65 trillion, accounting for nearly 90% of total reserves, while banks and financial institutions collectively hold Rs. 295 billion, marking a strong 12% monthly increase. Notably, the share of convertible currency reserves — mainly USD, EUR, GBP, and JPY — reached Rs. 2.15 trillion (76.6%), while inconvertible reserves such as the Indian rupee grew faster, up 6.2% to Rs. 656 billion, highlighting Nepal’s deep trade links with India.

The data also shows that Nepal’s import capacity has now risen to 20.4 months for goods and 16.6 months for goods and services combined, providing a comfortable buffer against external shocks such as oil price surges or capital outflows. The reserves-to-GDP ratio has also improved to 45.9%, one of the strongest in South Asia.

Economists credit the improvement to a mix of higher remittances, declining imports, and strong foreign income receipts, including ICT exports. However, they caution that sustaining such reserves will require careful fiscal and trade management, as import demand tends to rebound quickly when liquidity rises.

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