KATHMANDU, Sept 22: Nepal’s foreign exchange reserves have nearly tripled over the past five years, driven by rising remittance inflows, tourism earnings, foreign aid and loans, export income and relative restraint on imports.
According to Nepal Rastra Bank, the country’s foreign exchange reserves reached Rs 3.946 trillion by the end of Shrawan 2083 BS (August 16, 2026). The reserves stood at Rs 1.216 trillion at the end of fiscal year 2021/22. Their continued growth has strengthened Nepal’s capacity to meet its external financial obligations.
Foreign exchange reserves are funds available to purchase goods and services from abroad, repay foreign debt, finance imports and settle other international liabilities. Adequate reserves help maintain external sector stability and strengthen a country’s ability to finance imports and make international payments.
Former NRB executive director Nar Bahadur Thapa said strong foreign exchange reserves benefit the economy.
Foreign exchange reserves reach Rs 2.255 trillion
“Foreign exchange reserves support national development,” he said. “They facilitate the import of goods, raw materials and technology.” He added that they also help the country carry out large projects.
The reserves stood at Rs 1.539 trillion at the end of fiscal year 2022/23. They rose to Rs 2.041 trillion in 2023/24, Rs 2.678 trillion in 2024/25 and Rs 3.473 trillion at the end of 2025/26.
A large share of the reserves is held by Nepal Rastra Bank. The central bank’s reserves increased by 1.3 percent, from Rs 3.473 trillion at the end of Asar to Rs 3.518 trillion at the end of Shrawan.
Foreign exchange reserves held by banks and financial institutions other than NRB rose by 0.9 percent, from Rs 424.48 billion to Rs 428.22 billion during the same period. Indian currency accounted for 21.8 percent of the total reserves at the end of Shrawan.
Growing reserves directly strengthen Nepal’s import capacity. The country has a large trade deficit and depends heavily on imports for fuel, industrial raw materials, machinery, electrical equipment and consumer goods. Adequate reserves reduce the risk of foreign currency shortages when purchasing essential goods and services from international markets. They also help stabilise the supply of essential commodities.
A strong reserve position improves the country’s external payment capacity. Foreign currency is required to repay the principal and interest on external debt, purchase international services and meet other overseas obligations.
Reserve adequacy is also linked to stability in the foreign exchange market. A large imbalance between the demand for and supply of foreign currency can put pressure on exchange rates. Sufficient reserves give the central bank greater room to manage such pressure and maintain market liquidity when demand rises suddenly.
Foreign exchange reserves hold particular significance because the Nepali rupee is pegged to the Indian currency. With Indian currency making up a sizeable share of the reserves, the stock also supports trade and payment settlements with India.
However, stakeholders warn that rising reserves alone do not prove that every part of the economy is performing well. If reserves have grown mainly because of remittances or lower imports, Nepal must expand production, exports and other sources of foreign currency to sustain the growth.
Expanding exports, increasing tourism earnings, promoting information technology and service exports, and replacing imports with domestic production could turn the reserve growth into a foundation for long-term external stability.
