How Did We Perform As a Nation in Second Month of Fiscal Year 2083/84? A Quick Macroeconomic Summary

Nepal Rastra Bank, the central bank of Nepal, has unveiled the current macroeconomic and financial situation of Nepal based on one-month data (Ending Mid-September) of FY 2026/27.

Overall

Nepal Rastra Bank estimated that inflation remained at 6.34 percent on a year-over-year basis. The gross foreign exchange reserves stood at 26.48 billion in USD terms, whereas total imports and exports increased 61.9 percent, and imports increased 31.6 percent.

The NEPSE index stood at 2,612.43 in mid-September 2026, down from 2,672.25 recorded during the same period in September 2025.

Inflation

The year-on-year consumer price inflation stood at 6.34 percent in mid-September 2026, up from 1.87 percent recorded a year earlier.

Food and beverage inflation rose to 7.54 percent, while inflation in the non-food and services category stood at 5.69 percent during the review month. In comparison, prices of food and beverages had declined by 1.34 percent in the same period of the previous year, while prices in the non-food and services category had increased by 3.70 percent.

Import and Export

During the first two months of 2026/27, merchandise exports increased 61.9 percent to Rs. 76.59 billion, compared to an 88.6 percent growth recorded during the same period a year earlier. Destination-wise, exports to India, China and other countries increased by 70.6 percent, 137.6 percent and 22.7 percent, respectively.

Exports of soybean oil, polyester yarn and thread, palm oil, zinc sheets and particle board, among others, increased during the review period. In contrast, exports of Ayurvedic medicines, tanned skin, pulses, Nepalese paper and paper products, and herbs, among others, declined.

During the same two-month period, merchandise imports increased 31.6 percent to Rs. 401.52 billion, compared to a 16.2 percent growth in the corresponding period of the previous year. Imports from India, China and other countries increased by 27.4 percent, 17.2 percent and 56.6 percent, respectively.

Imports of petroleum products, chemical fertilizer, crude soybean oil, edible oil, transport equipment, vehicles and vehicle spare parts, among others, increased. Meanwhile, imports of gold, rice/paddy, aircraft spare parts, polythene granules, and medical equipment and tools, among others, declined during the review period.

The total trade deficit increased 26.0 percent to Rs. 324.93 billion during the first two months of 2026/27, compared to an 8.6 percent increase in the corresponding period a year earlier. The export-import ratio improved to 19.1 percent during the review period, up from 15.5 percent in the corresponding period of the previous year.

Services and Remittance

Net services income recorded a deficit of Rs. 22.04 billion during the review period, narrowing from a deficit of Rs. 30.88 billion in the corresponding period of the previous year.

Remittance inflows increased 23.9 percent to Rs. 436.36 billion during the first two months of 2026/27, compared to a 33.1 percent increase recorded in the same period a year earlier. During mid-August to mid-September (Bhadra), remittance inflows amounted to Rs. 221.31 billion, up from Rs. 174.67 billion during the corresponding period of the previous year.

In US dollar terms, remittance inflows rose 13.5 percent to USD 2.85 billion during the review period, compared to a 27.6 percent increase in the same period of the previous year.

Inter-bank Transaction

During the review period, interbank transactions of BFIs totaled Rs. 339.57 billion on a turnover basis. Of this, Rs. 319.40 billion represented transactions among commercial banks, while Rs. 20.17 billion involved other financial institutions, excluding transactions between commercial banks. In the corresponding period of the previous year, total interbank transactions stood at Rs. 228.74 billion, comprising Rs. 198.09 billion among commercial banks and Rs. 30.65 billion among other financial institutions, excluding transactions among commercial banks.

Price of Oil and Gold

The price of Crude Oil Brent in the international market surged 83.4 percent to USD 127.84 per barrel in mid-September 2026, up from USD 69.69 per barrel a year earlier. Similarly, the price of gold increased 15.4 percent to USD 4,263.55 per ounce, compared to USD 3,695.40 per ounce in mid-September 2025.

Foreign Exchange Reserves and Adequacy Indicator

Gross foreign exchange reserves increased 4.3 percent to Rs. 4,065.78 billion in mid-September 2026, from Rs. 3,897.67 billion in mid-July 2026. In US dollar terms, gross foreign exchange reserves rose 4.6 percent to USD 26.48 billion, up from USD 25.31 billion over the same period.

Of the total foreign exchange reserves, reserves held by Nepal Rastra Bank (NRB) increased 4 percent to Rs. 3,610.76 billion in mid-September 2026, from Rs. 3,473.19 billion in mid-July. Meanwhile, reserves held by banks and financial institutions, excluding NRB, increased 7.2 percent to Rs. 455.01 billion, from Rs. 424.48 billion. The share of Indian currency in total reserves stood at 21.3 percent in mid-September 2026.

Based on the import levels recorded during the first two months of 2026/27, the banking sector's foreign exchange reserves were sufficient to cover 20.9 months of prospective merchandise imports and 17.8 months of merchandise and services imports.

The reserves-to-GDP, reserves-to-imports and reserves-to-M2 ratios stood at 61.6 percent, 148.5 percent and 44.9 percent, respectively, in mid-September 2026. These ratios stood at 59.1 percent, 163.4 percent and 43.8 percent, respectively, in mid-July 2026.

Exchange Rate

The Nepalese rupee appreciated 0.3 percent against the US dollar in mid-September 2026 compared to mid-July 2026, reversing a 2.7 percent depreciation recorded over the same period of the previous year. The buying exchange rate stood at Rs. 153.24 per US dollar in mid-September 2026, compared to Rs. 153.72 per US dollar in mid-July 2026.

Nepal Government Expenditure and Revenue

According to the Ministry of Finance and the Financial Comptroller General Office (FCGO), the Government’s total expenditure stood at Rs. 199.84 billion during the first month of 2026/27. Of the total, recurrent expenditure amounted to Rs. 122.04 billion, capital expenditure to Rs. 7.66 billion, and financial expenditure to Rs. 70.14 billion during the review period. Meanwhile, the Government mobilized total revenue of Rs. 183.21 billion, including funds to be transferred to provincial and local governments. Of this, tax revenue amounted to Rs. 172.43 billion, while non-tax revenue stood at Rs. 10.78 billion during the review period.

Cash Balance of Government

The cash balance in various Government of Nepal (GoN) accounts maintained at Nepal Rastra Bank (NRB) stood at Rs. 384.69 billion in mid-September 2026, including the accounts of provincial and local governments. This balance had stood at Rs. 277.46 billion in mid-July 2026.

Banking

The monetary sector’s total domestic credit declined by 0.8 percent during the review period, the same rate of decrease recorded in the corresponding period of the previous year. On a year-on-year basis, however, domestic credit increased by 2.1 percent in mid-September 2026.

The monetary sector’s net claims on the Government decreased by 19.8 percent during the review period, compared to a 13.0 percent decline in the corresponding period a year earlier. On a year-on-year basis, such claims decreased by 30.9 percent in mid-September 2026.

Deposits at Banks and Financial Institutions (BFIs) increased by Rs. 72.80 billion, or 0.9 percent, to Rs. 8,349.72 billion during the review period. This compares with an increase of Rs. 32.86 billion, or 0.5 percent, in the corresponding period of the previous year. On a year-on-year basis, deposits at BFIs grew by 14.4 percent in mid-September 2026.

Meanwhile, private sector credit from BFIs increased by 1.6 percent, or Rs. 93.52 billion, to Rs. 5,950.58 billion during the review period. This compares with a 0.9 percent increase, or Rs. 49.24 billion, in the corresponding period of the previous year. On a year-on-year basis, credit to the private sector from BFIs increased by 7.3 percent in mid-September 2026.

Interest Rates

The average base rates of commercial banks, development banks and finance companies stood at 4.70 percent, 6.15 percent and 6.72 percent, respectively, in the second month of 2026/27. In comparison, the average base rates of commercial banks, development banks and finance companies were 5.72 percent, 8.09 percent and 8.77 percent, respectively, in the corresponding month of the previous year.

Balance of Payments

Balance of Payments (BOP) remained at a surplus of Rs.187.68 billion in the review period. Such surplus was Rs. 153.68 billion in the previous year. In US Dollar terms, the BOP remained in surplus at Rs. 1.23 billion in the review period, compared with Rs. 1.10 billion in the same period of the previous year.