Foreign Exchange Reserves Reach Record High, Strengthening External Stability

Nepal’s foreign exchange reserves rose sharply in the first four months of fiscal year 2082/83 (up to mid-November 2025), reaching a historic high and significantly strengthening the country’s external position. According to data released by Nepal Rastra Bank, strong remittance inflows and a large balance of payments surplus have provided a solid cushion against external risks.

As of mid-November 2025, total foreign exchange reserves stood at Rs 3,055.52 billion, up 14.1 percent from Rs 2,677.68 billion recorded at the end of mid-July 2025. In US dollar terms, reserves increased by 10.3 percent, rising from USD 19.50 billion to USD 21.52 billion over the same period.

Economists say the rapid accumulation of reserves has significantly reduced Nepal’s vulnerability to external shocks. Despite continued pressure from high imports and service-sector outflows, the strong reserve position has improved confidence in the country’s ability to meet external payment obligations and manage exchange-rate stability.

A major portion of the reserves is held by the central bank. Foreign exchange reserves at Nepal Rastra Bank increased by 12.8 percent to Rs 2,724.66 billion by mid-November, up from Rs 2,414.64 billion at the end of mid-July. This rise reflects stronger foreign currency inflows and prudent reserve management by the central bank.

At the same time, foreign exchange holdings of banks and financial institutions (excluding Nepal Rastra Bank) rose even faster, increasing by 25.8 percent to Rs 330.85 billion from Rs 263.04 billion over the same period. Analysts view this as a sign of improved liquidity in the banking system and greater availability of foreign currency in the private financial sector.

The composition of reserves also highlights Nepal’s close economic ties with its southern neighbor. As of mid-November, the Indian rupee accounted for 21.9 percent of total foreign exchange reserves, reflecting Nepal’s heavy trade dependence on India and the widespread use of the Indian currency in cross-border transactions.

Overall, the latest data show that Nepal’s foreign exchange reserves are at their strongest level in recent years, providing important macroeconomic stability. However, experts caution that the buildup of reserves remains largely remittance-driven. For long-term sustainability, they stress the need to expand exports, increase service earnings and attract foreign investment, so that reserve growth is supported by productive economic activity rather than continued reliance on overseas labor income alone.