Nepal Rastra Bank’s Foreign Investments Cross NPR 1.8 Trillion Mark

Nepal Rastra Bank (NRB), the country’s central bank, has seen its foreign investment holdings exceed NPR 1.8 trillion, marking a record high. According to the latest data from NRB, as of Ashwin (mid-October 2025), the bank’s investments in foreign securities reached NPR 1.811 trillion, up sharply from NPR 1.506 trillion at the end of Asar (mid-July 2025). This represents an increase of over NPR 300 billion in just three months.

1. Major Source of Income

The NRB’s investment in foreign securities—typically in U.S. Treasury bonds, European government bonds, and other highly rated instruments—has long been its primary source of income. These investments generate interest and dividend income, forming the backbone of the central bank’s annual revenue.
NRB deploys its foreign currency reserves—accumulated largely through remittance inflows, foreign aid, and export receipts—into these securities to ensure safety and liquidity while earning moderate returns.

2. Increase Driven by Growing Reserves

The steep rise from NPR 15.06 trillion to NPR 18.11 trillion (a jump of nearly 18%) indicates that Nepal’s foreign exchange reserves have expanded in recent months. This expansion is attributed to:

• Sustained high remittance inflows, especially ahead of the festive season.

• Reduced imports due to import restrictions and lower global fuel prices.

• Steady tourism recovery contributing to foreign currency inflows.

These factors allowed the central bank to channel more reserves into secure foreign investments.

3. Domestic Liquidity and Currency Circulation

While foreign investments grew, NRB also expanded its domestic currency supply. As of Ashwin, the total currency in circulation in Nepal reached NPR 788 billion, up from NPR 750 billion in Asar.
This NPR 28 billion increase was largely seasonal—reflecting higher cash demand during Dashain and Tihar festivals, when household spending peaks.

4. Expansion of the Balance Sheet

NRB’s total balance sheet also expanded by NPR 293 billion in the first quarter of FY 2082/83, rising to NPR 29.50 trillion from NPR 29.20 trillion at the end of FY 2081/82.
This expansion signals both growing foreign asset holdings and increased liquidity injections into the domestic banking system.

5. Broader Economic Implications

• Positive Indicator of External Stability: The surge in foreign investment suggests strong external reserves, enhancing Nepal’s ability to pay for imports and manage foreign debt obligations.

• Monetary Cushion: It provides NRB a wider buffer to stabilize the Nepali rupee against the U.S. dollar amid global volatility.

• Interest Rate Impact: As more funds are parked abroad, domestic liquidity could tighten slightly, but festival-driven spending has balanced the situation for now.

Nepal Rastra Bank’s foreign investments have climbed to an all-time high of NPR 1.8 trillion, driven by robust remittance inflows and strong reserve accumulation. The bank’s balance sheet expansion reflects growing confidence in both external and domestic monetary positions. As festival spending eases in coming months, NRB’s next challenge will be maintaining liquidity stability while managing inflation and interest rate pressures.