The NEPSE Journal
Market commentary, data deep-dives, and trading notes from the NEPSE Trading desk.
Nepal’s foreign exchange reserves surpassed Rs. 2.95 trillion, with import cover exceeding 20 months — signaling strong external stability and renewed confidence in the rupee.
Private sector credit increased by Rs. 12.6 billion (0.2%) in August 2025, mainly led by trade and service sectors, even as liquidity remained tight and domestic assets declined sharply.
Nepal’s Net Domestic Assets fell by Rs. 147 billion in August 2025, mainly due to higher government deposits and weaker credit expansion. This points to mounting liquidity stress in the domestic economy.
Broad Money (M2) contracted by Rs. 58B in August 2025, reflecting weaker demand deposits, slow private sector credit growth, and cautious banking behavior. While external reserves remain strong, the domestic economy shows signs of tightening liquidity and sluggish growth momentum.
Nepal’s debt is largely financed by its own financial institutions, particularly commercial banks. The rising dominance of long-term bonds reflects a policy shift toward stability but raises concerns over fiscal costs, crowding-out, and debt sustainability.
Nepal’s fiscal structure in 2025/26 relies heavily on long-term development bonds, boosting financing stability but also increasing interest costs and fiscal vulnerability. The challenge ahead lies in balancing debt management with sustainable growth.
Nepal’s domestic debt has hit an all-time high of Rs. 1.27 trillion, fueled by heavy issuance of development bonds and reduced short-term borrowing. While it strengthens liquidity management, sustainability concerns loom as the government increasingly relies on domestic banks for funding.
Commercial banks’ exposure to government debt has crossed Rs. 1.02 trillion, reflecting growing fiscal reliance on banks. While it supports short-term financing stability, it poses long-term risks to credit growth and market balance.
