- Friday, 3 April 2026
Kathmandu, Apr. 3: Nepal’s external sector has shown remarkable strength in the first eight months of fiscal year 2025/26, fueled largely by a sharp rise in remittance inflows, alongside improvements in the current account, balance of payments, and foreign exchange reserves.
According to current macroeconomic and financial situation report made public by the Nepal Rastra Bank on Thursday, remittance inflows surged by 37.7 per cent to Rs. 1,449.65 billion during the review period, a significant jump compared to a 9.5 per cent increase recorded in the same period last year.
In the month of Falgun alone (mid-February to mid-March), remittances totaled Rs. 188.64 billion, up from Rs. 151.19 billion a year earlier.
However, remittance inflows slightly decreased in the review month of Falgun compared to the previous month of Magh. During mid-January to mid-February (Magh), remittance inflows stood at Rs. 198.08 billion.
In US dollar terms, remittance inflows grew by 31 per cent to USD 10.15 billion in the review period. Such inflow had increased by 7.1 per cent in the same period of the previous year.
The rise in remittances contributed to a notable increase in net secondary income, which climbed to Rs. 1,591.66 billion from Rs. 1,149.30 billion in the corresponding period last year.
Despite a slight decline in the number of first-time labour approvals for foreign employment—273,576 compared to 317,068 last year—the number of renewals increased to 251,985 from 217,403, indicating sustained overseas labour migration.
However, ongoing geopolitical tensions involving Iran, Israel, and the United States have posed a challenge to remittance inflows in the country.
Millions of Nepalis work in the Gulf region, and if the conflict continues for a long time, both employment and remittance inflows may be affected. Nepal receives around 41 per cent of its total remittance from the Gulf region.
Forex reserves rise by Rs. 736 billion to Rs. 3,413 billion
Meanwhile, the foreign exchange reserves have increased significantly in the first eight months of the current fiscal year.
According to NRB, gross foreign exchange reserves rose by 27.5 per cent to Rs. 3,413.77 billion in mid-March 2026, compared to Rs. 2,677.68 billion recorded in mid-July 2025.
This indicates that around Rs. 736.09 billion was added during the first eight months of the current fiscal year.
In US dollar terms, the gross foreign exchange reserves increased by 18.3 per cent to 23.08 billion in mid-March 2026 from 19.50 billion in mid-July 2025.
Of the total foreign exchange reserves, the reserves held by NRB increased by 25.7 per cent to Rs. 3035.11 billion in mid-March 2026 from Rs. 2414.64 billion in mid-July 2025.
Reserves held by banks and financial institutions (except NRB) increased by 44 per cent to Rs. 378.66 billion in mid-March 2026 from Rs. 263.04 billion in mid-July 2025. The share of Indian currency in total reserves stood at 21 per cent in mid-March 2026.
Based on the imports of eight months of 2025/26, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 21.4 months, and merchandise and services imports of 18.5 months.
The ratio of reserves-to-GDP, reserves-to-imports and reserves-to-M2 stood at 55.9 per cent, 153.8 per cent, and 40.8 per cent respectively in mid-March 2026.
Current account BOP surplus widens
Similarly, the country’s current account posted a robust surplus of Rs. 552.85 billion, significantly higher than Rs. 197.03 billion recorded in the same period last year. In US dollar terms, the surplus stood at USD 3.88 billion, up from USD 1.46 billion.
In the review period, net capital transfer amounted to Rs. 12.59 billion. In the same period of the previous year, such a transfer amounted to Rs. 6.41 billion. Similarly, during the review period, Rs. 10.84 billion in foreign direct investment (equity only) was received.
In the same period of the previous year, foreign direct investment inflows (equity only) amounted to Rs. 8.47 billion.Similarly, the balance of payments (BOP) remained strong, registering a surplus of Rs. 658.35 billion, more than double last year’s Rs. 310.37 billion.
In US dollar terms, the BOP surplus reached USD 4.61 billion.
