NRB Report 2025/26: Nepal’s Foreign Exchange Reserves Grow, Strengthening External Stability

Nepal’s external sector has continued to strengthen in the fiscal year 2025/26, with the country’s foreign exchange reserves expanding significantly, according to the latest Nepal Rastra Bank (NRB) Mid-September 2025 report. The data shows that Nepal’s gross foreign exchange reserves climbed to Rs 2.88 trillion, up 7.6% from mid-July 2025, while gross foreign assets of the overall banking sector surged to a record Rs 3.03 trillion, a 7.7% rise over the same period.

This growth underscores Nepal’s improving external stability amid controlled import levels, robust remittance inflows, and rising tourism earnings. The NRB’s report highlights that the reserves are now sufficient to finance 16 months of total imports and nearly 20 months of merchandise imports, one of the highest import cover ratios in the region. These strong indicators have boosted investor confidence and reinforced Nepal’s financial resilience in the face of global uncertainties.

The composition of reserves reveals that convertible reserves—those available for international trade and payments—rose by 8.4% to reach Rs 2.23 trillion, while inconvertible reserves increased by 4.9% to Rs 648 billion. The central bank’s own holdings of foreign assets grew by 7.1% to Rs 2.74 trillion, supported by a rise in gold and IMF SDR holdings, which now stand at Rs 158.6 billion, up 9.9%.

The Net Foreign Assets (NFA) of the banking sector rose by 8.2% year-on-year, reaching Rs 2.88 trillion, while foreign liabilities remained stable at Rs 157.5 billion. Additionally, key financial ratios strengthened further — the foreign reserves-to-GDP ratio climbed to 47.2%, reserves-to-imports improved to 133.1%, and reserves-to-M2 money supply rose to 36.6%, all signaling strong liquidity and external sector sustainability.

Economists attribute this steady performance to multiple factors, including stable remittance inflows, revived tourism, and prudent monetary management by the NRB. The central bank’s policy of maintaining a healthy reserve buffer has protected Nepal from external shocks and currency volatility. Moreover, the rising inflows from tourism—driven by over 815,000 foreign arrivals in 2025—and consistent remittance growth have become key pillars of Nepal’s foreign currency stability.

Despite these positive outcomes, analysts warn that Nepal must focus on export diversification, import substitution, and productive investment utilization to sustain this external strength. High reserves, while a sign of macroeconomic health, must be supported by real-sector growth to ensure long-term economic resilience.