Nepal's Foreign Exchange Reserves Nearly Triple in Five Years to Rs 3.946 Trillion
Nepal's foreign exchange reserves have surged from Rs 1.216 trillion in FY 2021/22 to Rs 3.946 trillion by mid-August 2026, driven by remittances, tourism, and restrained imports. While the buildup strengthens external stability and import capacity, stakeholders caution that sustainable growth requires expanding exports and domestic production.
KATHMANDU — Nepal's foreign exchange reserves have nearly tripled over the past five years, climbing from Rs 1.216 trillion at the end of fiscal year 2021/22 to Rs 3.946 trillion by the end of Shrawan 2083 BS (August 16, 2026), according to Nepal Rastra Bank (NRB).
The surge has been driven by rising remittance inflows, tourism earnings, foreign aid and loans, export income, and relative restraint on imports. The continued buildup has strengthened Nepal's capacity to meet its external financial obligations.
What Foreign Exchange Reserves Mean for Nepal
Foreign exchange reserves are funds available to purchase goods and services from abroad, repay foreign debt, finance imports, and settle other international liabilities. Adequate reserves help maintain external sector stability and reinforce a country's ability to finance imports and make international payments.
Former NRB executive director Nar Bahadur Thapa emphasized the economic benefits of a strong reserve position.
"Foreign exchange reserves support national development," he said. "They facilitate the import of goods, raw materials, and technology."
He added that reserves also help the country carry out large-scale projects.
A Five-Year Climb
The reserve stock has grown steadily year after year:
- FY 2021/22: Rs 1.216 trillion
- FY 2022/23: Rs 1.539 trillion
- FY 2023/24: Rs 2.041 trillion
- FY 2024/25: Rs 2.678 trillion
- FY 2025/26: Rs 3.473 trillion
- Shrawan 2083 BS (Aug 16, 2026): Rs 3.946 trillion
A large share of the reserves is held by Nepal Rastra Bank. The central bank's holdings 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.
Reserves held by banks and financial institutions other than NRB rose by 0.9 percent, from Rs 424.48 billion to Rs 428.22 billion during the same period. Indian currency accounted for 21.8 percent of total reserves at the end of Shrawan.
Why the Buildup Matters
Growing reserves directly strengthen Nepal's import capacity. The country runs a large trade deficit and depends heavily on imports for fuel, industrial raw materials, machinery, electrical equipment, and consumer goods. Adequate reserves reduce the risk of foreign currency shortages when purchasing essential goods and services from international markets, and they help stabilize the supply of essential commodities.
A strong reserve position also improves the country's external payment capacity. Foreign currency is required to repay the principal and interest on external debt, purchase international services, and meet other overseas obligations.
Reserve adequacy is also linked to stability in the foreign exchange market. A large imbalance between the demand for and supply of foreign currency can put pressure on exchange rates. Sufficient reserves give the central bank greater room to manage such pressure and maintain market liquidity when demand rises suddenly.
Foreign exchange reserves hold particular significance because the Nepali rupee is pegged to the Indian currency. With Indian currency making up a sizeable share of the reserves, the stock also supports trade and payment settlements with India.
Caution Amid the Optimism
Stakeholders warn that rising reserves alone do not prove that every part of the economy is performing well. If reserves have grown mainly because of remittances or lower imports, Nepal must expand production, exports, and other sources of foreign currency to sustain the growth.
Expanding exports, increasing tourism earnings, promoting information technology and service exports, and replacing imports with domestic production could turn the reserve growth into a foundation for long-term external stability.