First 2-Month Macroeconomic Highlights: Inflation at 1.87%; Remittance Surges 33.1%, Foreign Currency Enough to Cover 16 Months Import

Nepal Rastra Bank, the central bank of Nepal, has unveiled the current macroeconomic and financial situation of Nepal based on two-month data (ending mid-September) of FY 2025/26

Overall
Nepal Rastra Bank estimated that the inflation remained at 1.87 percent on a year-over-year basis. The gross foreign exchange reserves stood at 2881.35 billion in USD terms, whereas the total imports and exports increased 16.2 percent and 88.6 percent, respectively.

NEPSE index stood at 2672.25 in mid-September 2025 compared to 2580.76 in mid-September 2024.

Inflation

The y-o-y consumer price inflation stood at 1.87 percent in mid-September 2025 compared to 3.86 percent a year ago.

The y-o-y wholesale price inflation of consumption goods stood at 4.21 percent, while intermediate goods and capital goods stood at 0.83 percent and 2.35 percent, respectively. The y-o-y wholesale price index of construction material increased 4.18 percent in the review month.

Import and Export

During the two months of 2025/26, merchandise exports increased 88.6 percent to Rs.47.32 billion against a decrease of 5.1 percent in the same period of the previous year. Destination-wise,exports to India and other countries increased 139.9percent and 0.4 percent respectively whereas exports to China decreased 58.5 percent. Exports of soyabean oil, palm oil, jute goods, cardamom and noodles among others increased whereas exports of zinc sheet, particle board, tea, woolen carpet and oil cakes among others decreased in the review period.

During the two months of 2025/26, mercandise imports increased 16.2 percent to Rs.305.16 billion compared to an increase of 1.1 percent a year ago. Destination-wise, imports from India, China, and other countries increased 8.0 percent, 25.1 percent, and 33.4 percent respectively. Imports of crude soyabean oil, chemical fertilizer, transport equipment, vehicle and spare parts, aircraft
spareparts and telecommunication equipments and parts among others increased whereas imports of hot rolled sheet in coil, edible oil, readymade garments, oil seeds and garlic among others decreased in the review period.

Total trade deficit increased 8.6 percent to Rs.257.84 billion during the two months of 2025/26. Such a deficit had increased 1.8 percent in the corresponding period of the previous year. Theexport-import ratio increased to 15.5 percent in the review period from 9.6 percent in the corresponding period of the previous year.

Services and Remittance

Net services income remained at a deficit of Rs.31.16 billion during the review period. Such income had a deficit of Rs.27.93 billion in the same period of the previous year.

Remittance inflows increased 33.1 percent to Rs.352.08 billion in the two months of 2025/26 compared to an increase of 15.8 percent in the same period of the previous year. During mid August to mid-September (Bhadra month), remittance inflows stood at Rs. 174.67 billion. In the same period of the previous year, such inflows were Rs. 127.99 billion.

Inter-bank Transaction

In the review period, BFIs inter-bank transactions amounted Rs.228.74 billion on a turnover basis, including Rs.198.09 billion inter-bank transactions among commercial banks, and Rs.30.65 billion among other financial institutions (excluding transactions among commercial banks). In the corresponding period of the previous year, such transaction was Rs.193.70 billion, including Rs.190.10 billion among commercial banks and Rs.3.6 billion among other financial institutions (excluding transactions among commercial banks).

Price of Oil and Gold

The price of oil (Crude Oil Brent) in the international market decreased 5.8 percent to US dollar 69.69 per barrel in mid-September 2025 from US dollar 73.96 per barrel a year ago. The price of gold increased 43.01 percent to US dollar 3695.40 per ounce in mid-September 2025 from US dollar 2584 per ounce a year ago.

Foreign Exchange Reserves and Adequacy Indicator

Gross foreign exchange reserves increased 7.6 percent to Rs.2881.35 billion in mid-September 2025 from Rs.2677.68 billion in mid July 2025. In the US dollar terms, the gross foreign exchange reserves increased 4.7 percent to 20.41 billion in mid-September 2025 from 19.50 billion in mid-July 2025.

Of the total foreign exchange reserves, the reserves held by NRB increased 6.9 percent to Rs.2582.38 billion in mid-September 2025 from Rs. 2414.64 billion in mid-July 2025. Reserves held by banks and financial institutions (except NRB) increased 13.7 percent to Rs.298.97 billion in mid-September 2025 from Rs.263.04 billion in mid-July 2025. The share of Indian currency in total reserves stood at 22.5 percent in mid-September 2025.

Based on the imports of the two months of 2025/26, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 19.7 months, and merchandise and services imports of 16 months. The ratio of reserves-to-GDP, reserves-to-imports and reserves-to-M2 stood at 47.2 percent, 133.1 percent, and 36.6 percent respectively in mid September 2025. Such ratios were 43.8 percent, 128.1 percent, and 34.1 percent respectively inmid-July 2025.

Exchange Rate

Nepalese currency vis-à-vis the US dollar depreciated 2.7 percent in mid-September 2025 from mid-July 2025. It had depreciated 0.4 percent in the same period of the previous year. The buying exchange rate per US dollar stood at Rs.140.84 in mid-September 2025 compared to Rs.137 in mid-July 2025.

Nepal Government Expenditure and Revenue

According to Ministry ofFinance, Financial Comptroller General Office (FCGO), the total expenditure of the Nepal Government stood at Rs.180.17 billion during the second month of 2025/26. The recurrent expenditure, capital expenditure and financial expenditure amounted to Rs.114.19 billion, Rs.6.35 billion and Rs.59.63 billion respectively in the review period.

Cash Balance of Government

Cash Balance at various accounts of the GoN maintained with NRB remained Rs.255.61 billion (including Provincial Governments and Local Government Account) in mid-September 2025. Such balance was Rs.130.73 billion in mid-July 2025

Banking

Domestic credit decreased 0.8 percent in the review period compared to an decrease of 0.2 percent in the corresponding period of the previous year. On y-o-y basis, domestic credit increased 5.5 percent in mid-September 2025.

Monetary Sector's claims on the private sector increased 1.6 percent in the review period compared to an increase of 2.3 percent in the corresponding period of the previous year. On y-o-y basis, such claims increased 7.3 percent in mid-September 2025.

Deposits at Banks and Financial Institutions (BFIs) increased Rs.32.86 billion (0.5 percent) reaching 7,296.74 billion in the review period compared to an increase of Rs.35.03 billion (0.5 percent) in the corresponding period of the previous year. On y-o-y basis, deposits at BFIs expanded 12.5 percent in mid-September 2025.

Private sector credit from BFIs increased Rs.49.24 billion (0.9 percent) in the review period reaching 5,546.94 billion compared to an increase of Rs.73.39 billion (1.4 percent) in the corresponding period of previous year.

Interest Rates

The average base rates of commercial banks, development banks and finance companies stood 5.72 percent, 8.09 percent, and 8.77 percent respectively in the second month of 2025/26. The average base rate of commercial banks, development banks and finance companies were 7.49 percent, 9.15 percent, and 10.65 percent respectively in the corresponding month a year ago.

Balance of Payments

Balance of Payments (BOP) remained at a surplus of Rs.153.68 billion in the review period. Such surplus was Rs.101.77 billion in the previous year. In the US Dollar terms, the BOP remained at a surplus of 1.10 billion in the review period compared to a surplus of 758.4 million in the same period of the previous year.