Macroeconomic Summary of First 8 Months: Forex Reserves Reach Record Rs. 3,413.77B, Inflation at 3.62%, Remittances Surge 37.7%
Nepal Rastra Bank, the central bank of Nepal, has unveiled the current macroeconomic and financial situation of Nepal based on eight months of data for FY 2025/26.
Overall
Nepal Rastra Bank estimated that the inflation remained at 3.62 percent on a year-over-year basis. The Gross foreign exchange reserves stood at Rs. 3,413.77 billion. Such reserve remained 23.08 billion in USD terms. The reserve is sufficient to cover the prospective merchandise and services imports of 18.5 months.
The NEPSE index stood 2820.45 in mid-March 2026 compared to 2736.49 in mid-March 2025.
Inflation
The y-o-y consumer price inflation stood at 3.62 percent in mid-March 2026 compared to 3.75 percent a year ago. The y-o-y wholesale price inflation stood at 3.64 percent in mid-March 2026 compared to 4.43 percent a year ago. The y-o-y wholesale price inflation of consumption goods decreased 4.44 percent while intermediate goods and capital goods stood at 8.54 percent and 3.51 percent respectively. The y-o-y wholesale price index of construction material increased 0.21 percent in the review month.
International Trade
During the eight months of 2025/26, merchandise exports increased 20.8 percent to Rs.191.11 compared to a growth of 57.2 percent in the same period of the previous year. Destination-wise, exports to India and other countries increased 25.3 percent and 7.8 respectively whereas exports to China decreased 53.7 Exports of soyabean oil, cardamom, palm oil, jute goods, and noodles among others increased whereas exports of zinc sheet, particle board, tea, woolen carpet and handicraft goods among others decreased in the review period.
During the eight months of 2025/26, merchandise imports increased 12.5 percent to Rs.1289.25 billion compared to a growth of 11.2 percent a year ago. Destination-wise, imports from India, China, and other countries increased 5.1 percent, 21.2 percent, and 26.0 percent respectively. Imports of crude soyabean oil, chemical fertilizer, silver, transport equipment, vehicle and spare parts and telecommunication equipment and parts among others increased whereas imports of edible oil, hot rolled sheet in coil, garlic, pulses and M.S. billet among others decreased in the review period.
Total trade deficit increased 11.2 percent to Rs.1098.14 billion during the eight months of 2025/26. Such a deficit had increased 6.2 percent in the corresponding period of the previous year. The export-import ratio increased to 14.8 percent in the review period from 13.8 percent in the corresponding period of the previous year.
Remittance and Services
Remittance inflows increased 37.7 percent to Rs.1449.65 billion in the eight months of 2025/26 compared to an increase of 9.5 percent in the same period of the previous year. During mid- February to mid-March (Falgun month), remittance inflows stood at Rs. 188.64 billion. In the same period of the previous year, such inflows were Rs. 151.19 billion. In the US Dollar terms, remittance inflows increased 31.0 percent to 10.15 billion in the review period. Such inflow had increased 7.1 percent in the same period of the previous year. Net services income remained at a deficit of Rs.37.69 billion during the review period. Such income had a deficit of Rs. 61.07 billion in the same period of the previous year.
Price of Gold and Oil
The price of oil (Crude Oil Brent) in the international market increased 45.8 percent to US dollar 103.23 per barrel in mid-March 2026 from US dollar 70.82 per barrel a year ago. The price of gold increased 69.6 percent to US dollar 5044.60 per ounce in mid-March 2026 from US dollar 2974.05 per ounce a year ago.
Foreign Exchange Reserves and Adequacy Indicator
Gross foreign exchange reserves increased 27.5 percent to Rs.3413.77 billion in mid-March 2026 from Rs.2677.68 billion in mid-July 2025. In US dollar terms, the gross foreign exchange reserves increased 18.3 percent to 23.08 billion in mid-March 2026 from19.50 billion in mid-July 2025. Of the total foreign exchange reserves, the reserves held by NRB increased 25.7 percent 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 44.0 percent 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 21.0 percent in mid-March 2026.
Based on the imports of the 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 percent, 153.8 percent, and 40.8 percent respectively in mid-March 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 7.2 percent in mid-March 2026 from mid-July 2025. It had depreciated 4.2 percent in the same period of the previous year. The buying exchange rate per US dollar stood at Rs.147.64 in mid-March 2026, compared to Rs.137 in mid-July 2025.
Fiscal Situation: Government's Expenditure and Revenue
According to the ministry of Finance, Financial Comptroller General Office (FCGO), the total expenditure of the Nepal Government stood at Rs. 926.59 billion during the eight months of 2025/26. Recurrent expenditure, capital expenditure, and financial expenditure amounted Rs. 642.15 billion, Rs. 78.49 billion, and Rs. 205.95 billion, respectively, during the review period.
In the review period, total revenue mobilization of the Nepal Government (including the amount to be transferred to provincial and local governments) stood at Rs. 747.28 billion. The tax revenue amounted to Rs. 676.59 billion and non-tax revenue to Rs. 70.69 billion in the review period.
Cash Balance of Government
Cash Balance at various accounts of the GoN maintained with NRB remained Rs. 377.61 billion (including Provincial Governments and Local Government Account) in mid-March 2026. Such a balance was Rs. 137.78 billion in mid-July 2025.
Banking
Domestic credit decreased by 0.3 percent in the review period compared to an increase of 1.9 percent in the corresponding period of the previous year. On y-o-y basis, domestic credit increased by 3.5 percent in mid-March 2026. Monetary sector's net claims on government decreased by 29.3 percent in the review period compared to a decrease of 21.5 percent in the corresponding period of the previous year. On y-o-y basis, such claims decreased by 14.7 percent in mid-March 2026.
Deposits at Banks and Financial Institutions (BFIs) increased by 6.6 percent (Rs.482.01 billion) reaching Rs.7,745.88 billion in the review period compared to an increase of 4.3 percent (Rs.277.23 billion) in the corresponding period of the previous year. On y-o-y basis, deposits at BFIs expanded 15.1 percent in mid-March 2026.
Private sector credit from BFIs increased by 4.4 percent (Rs.243.54 billion) reaching Rs. 5,741.24 billion in the review period compared to an increase of 6.0 percent (Rs.304.82 billion) in the corresponding period of previous year. On y-o-y basis, credit to the private sector from BFIs increased by 6.7 percent in mid-March 2026.
Interest Rate
The average base rate of commercial banks, development banks and finance companies stood at 5.10 percent, 7.17 percent, and 7.68 percent, respectively, in mid-March 2026. The average base rate of commercial banks, development banks and finance companies were 6.34 percent, 8.42 percent, and 9.32 percent respectively in the corresponding month a year ago.
Financial Access
As of mid-March 2026, a total of 106 BFIs, including 20 commercial banks, 17 development banks, 17 finance companies, 51 microfinance financial institutions, and 1 infrastructure development bank are in operation. The number of BFIs branches (including microfinance financial institutions) remained 11,465 in mid-March 2026 compared to 11,526 in mid-July 2025.
Going Digital: Electronic Transactions
From mid-February to mid-March 2026, the debit card users conducted 9.81 million transactions amounting to Rs.75.73 billion. Similarly, 62.54 million transactions worth Rs.540.76 billion was conducted through mobile banking, while 49.03 million transactions worth Rs.125.92 billion was conducted through QR code payments.
