Macroeconomic Summary of First 7 Months: Inflation at 3.25%, Remittances Rises by 39.8%, Foreign Currency Enough to Cover 18.0 Months Import

Nepal Rastra Bank, the central bank of Nepal, has unveiled the current macroeconomic and financial situation of Nepal based on seven months of data for FY 2025/26.

Overall

Nepal Rastra Bank estimated that the inflation remained at 3.25 percent on a year-over-year basis. The gross foreign exchange reserves stood at Rs. 3,302.66 billion. Such reserve remained 22.76 billion in USD terms. The reserve is sufficient to cover the prospective merchandise and services imports of 18.0 months.

The NEPSE index stood at 2,662.91 in mid-February 2026 compared to 2,698.03 in mid-February 2025.

Inflation

The y-o-y consumer price inflation stood at 3.25 percent in mid-February 2026 compared to 4.16 percent a year ago.

The y-o-y wholesale price inflation stood at 6.21 percent in mid-February 2026 compared to 3.47 percent a year ago. 9. The y-o-y wholesale price inflation of consumption goods stood at 0.72 percent, while intermediate goods and capital goods stood at 9.83 percent and 3.21 percent, respectively. The year-over-year wholesale price index of construction material increased 2.04 percent in the review month.

Import and Export

During the first seven months of 2025/26, merchandise exports rose by 32.2 percent, reaching Rs. 168.15 billion, compared to a 46.5 percent growth in the same period of the previous year. By destination, exports to India and other countries grew by 40.3 percent and 9.4 percent, respectively, while exports to China fell sharply by 55.3 percent. Exports of products such as soybean oil, cardamom, palm oil, jute goods, and shoes and sandals increased, whereas shipments of zinc sheets, particle boards, tea, woolen carpets, handicrafts, and other similar items declined during this period.

Meanwhile, merchandise imports for the seven months rose by 13.6 percent, reaching Rs. 1,123.49 billion, compared to a 10.1 percent growth in the same period last year. Imports from India, China, and other countries increased by 5.5 percent, 22.3 percent, and 29.5 percent, respectively. Items such as crude soybean oil, chemical fertilizers, silver, transport equipment, vehicles and spare parts, and gold recorded higher imports, while imports of hot-rolled sheets in coil, edible oil, pulses, M.S. billets, M.S. wire rods, bars, and coils declined during the review period.

The total trade deficit rose by 10.9 percent, reaching Rs. 955.34 billion during the first seven months of 2025/26, compared to a 6.2 percent increase in the same period last year. Meanwhile, the export-to-import ratio improved to 15.0 percent in the review period, up from 12.9 percent in the corresponding period of the previous year.

Services and Remittance

Net services income continued to show a deficit of Rs. 50.16 billion during the review period, compared to a deficit of Rs. 36.17 billion in the same period of the previous year.

Remittance inflows increased 39.8 percent to Rs. 1261.01 billion in the seven months of 2025/26 compared to an increase of 7.5 percent in the same period of the previous year. During mid- January to mid-February (Magh month), remittance inflows stood at Rs. 198.08 billion. In the same period of the previous year, such inflows were Rs. 137.50 billion.

Inter-bank Transaction

In the review period, BFIs' inter-bank transactions amounted to Rs. 636.22 billion on a turnover basis, including Rs. 559.86 billion among commercial banks and Rs. 76.36 billion among other financial institutions (excluding transactions among commercial banks). In the corresponding period of the previous year, such transactions were Rs 1040.01 billion, including Rs 937.81 billion among commercial banks and Rs 102.20 billion among other financial institutions.

Price of Oil and Gold

The price of oil (Crude Oil Brent) in the international market decreased 7.4 percent to US dollar 69.80 per barrel in mid-February 2026 from US dollar 75.38 per barrel a year ago. The price of gold increased 74.4 percent to US dollar 5043.15 per ounce in mid-February 2026 from US dollar 2891.50 per ounce a year ago.

Foreign Exchange Reserves and Adequacy Indicator

Gross foreign exchange reserves increased 23.3 percent to Rs. 3302.66 billion in mid-February 2026 from Rs. 2677.68 billion in mid-July 2025. In US dollar terms, the gross foreign exchange reserves increased 16.7 percent to 22.76 billion in mid-February 2026 from 19.50 billion in mid-July 2025.

Of the total foreign exchange reserves, the reserves held by NRB increased 21.2 percent to Rs. 2926.99 billion in midFebruary 2026 from Rs. 2414.64 billion in mid-July 2025. Reserves held by banks and financial institutions (except NRB) increased 42.8 percent to Rs. 375.67 billion in mid- February 2026 from Rs. 263.04 billion in mid-July 2025. The share of Indian currency in total reserves stood at 21.5 percent in mid-February 2026.

Based on the imports of the seven months of 2025/26, the foreign exchange reserves of the banking sector are sufficient to cover the prospective merchandise imports of 21.3 months, and merchandise and services imports of 18.0 months. The ratio of reserves-to-GDP, reserves-to-imports, and reserves-to-M2 stood at 54.1 percent, 150.2 percent, and 39.7 percent, respectively, in mid-February 2026. Such ratios were 43.8 percent, 128.1 percent, and 34.1 percent, respectively, in mid-July 2025.

Exchange Rate

Nepalese currency vis-à-vis the US dollar depreciated 5.4 percent in mid-February 2026 from mid-July 2025. It had depreciated 3.8 percent in the same period of the previous year. The buying exchange rate per US dollar stood at Rs. 144.83 in mid-February 2026 compared to Rs.137.0 in mid-July 2025.

Nepal Government Expenditure and Revenue

According to the Ministry of Finance, Financial Comptroller General Office (FCGO), Table 3: Government Expenditure and Revenue (Seven Months) Amount (Rs. in Billion) Particulars Percentage Change 2023/24, the total expenditure of the Nepal Government stood at Rs. 801.37 billion during the seven months of 2025/26. Recurrent expenditure, capital expenditure, and financial expenditure amounted to Rs. 562.37 billion, Rs. 63.73 billion, and Rs. 175.27 billion, respectively, during the review period

Cash Balance of Government

Cash Balance at various accounts of the GoN maintained with NRB remained Rs. 373.73 billion (including Provincial Governments and Local Government Account) in mid-Febraury 2026. Such a balance was Rs. 149.83 billion in mid-July 2025.

Banking

Domestic credit decreased by 0.3 percent in the review period compared to an increase of 1.3 percent in the corresponding period of the previous year. On a year-over-year basis, domestic credit increased by 4.2 percent in mid-February 2026.

Monetary sector's net claims on government decreased by 26.3 percent in the review period compared to a decrease of 20.5 percent in the corresponding period of the previous year. On a year-over-year basis, such claims decreased by 12.0 percent in mid-February 2026.

Deposits at Banks and Financial Institutions (BFIs) increased by 6.0 percent (Rs. 433.71 billion), reaching Rs. 7,697.59 billion in the review period compared to an increase of 3.8 percent (Rs. 245.34 billion) in the corresponding period of the previous year. On a year-over-year basis, deposits at BFIs expanded 14.9 percent in mid-February 2026.

Private sector credit from BFIs increased by 4.0 percent (Rs. 221.84 billion), reaching Rs. 5,719.54 billion in the review period compared to an increase of 5.6 percent (Rs. 283.46 billion) in the corresponding period of the previous year. On a year-over-year basis, credit to the private sector from BFIs increased by 6.8 percent in mid-February 2026.

Interest Rates

The average base rate of commercial banks, development banks, and finance companies stood at 5.12 percent, 7.19 percent, and 7.89 percent, respectively, in mid-February 2026. The average base rate of commercial banks, development banks, and finance companies was 6.46 percent, 8.52 percent, and 9.39 percent, respectively, in the corresponding month a year ago.

Balance of Payments

Balance of Payments (BOP) remained at a surplus of Rs. 572.73 billion. Such surplus was Rs. 284.41 billion in the previous year. In the US Dollar terms, the BOP remained at a surplus of Rs. 4.03 billion in the review period compared to a surplus of Rs. 2.11 billion in the same period of the previous year.