Nepal’s foreign exchange reserves have nearly tripled over the past five years, reaching Rs 3.946 trillion by mid-August 2026, supported by rising remittance inflows, tourism earnings, foreign aid and loans, export income and relatively restrained imports.
According to Nepal Rastra Bank (NRB), the country’s foreign exchange reserves stood at Rs 1.216 trillion at the end of fiscal year 2021/22. The reserves have increased steadily since then, reaching Rs 1.539 trillion in 2022/23, 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.
The reserves rose further to Rs 3.946 trillion by the end of Shrawan 2083 BS (August 16, 2026), strengthening Nepal’s capacity to finance imports, meet external debt obligations and settle other international payments.
Foreign exchange reserves are essential for purchasing goods and services from abroad, repaying foreign debt and meeting other international liabilities. Adequate reserves also provide a buffer against external financial pressures and help maintain stability in the external sector.
Former NRB executive director Nar Bahadur Thapa said the growth in foreign exchange reserves provides important support for economic development.
“Foreign exchange reserves support national development,” Thapa said, adding that they facilitate the import of goods, raw materials and technology and help the country undertake large infrastructure and development projects.
A significant portion of Nepal’s reserves is held by the central bank. NRB’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.
Meanwhile, foreign exchange reserves held by banks and financial institutions other than NRB increased by 0.9 percent during the same period, rising from Rs 424.48 billion to Rs 428.22 billion. Indian currency accounted for 21.8 percent of Nepal’s total foreign exchange reserves at the end of Shrawan.
The rising reserves have strengthened Nepal’s import capacity at a time when the country continues to run a large trade deficit and remains heavily dependent on imports of fuel, industrial raw materials, machinery, electrical equipment and consumer goods.
Higher reserves reduce the risk of foreign currency shortages when the country needs to pay for essential imports and international services. They also strengthen Nepal’s ability to meet principal and interest payments on external debt and other overseas obligations.
A strong reserve position can also provide greater room for the central bank to manage pressure in the foreign exchange market. Sudden increases in demand for foreign currency can put pressure on exchange rates, while adequate reserves allow the monetary authority to support market liquidity when necessary.
The reserves are particularly significant given Nepal’s fixed exchange-rate arrangement with the Indian rupee. Indian currency makes up a substantial share of Nepal’s reserves and plays an important role in facilitating trade and payment settlements with India.
However, economists and stakeholders have cautioned that rising foreign exchange reserves alone do not necessarily indicate broad-based economic strength. Much of the increase has been driven by remittances and relatively subdued imports, highlighting the need to expand domestic production and other sustainable sources of foreign currency.
Increasing exports, expanding tourism earnings, promoting information technology and other service exports, and replacing imports through competitive domestic production could help Nepal sustain reserve growth and strengthen its long-term external-sector stability.
