Remittance boosts Nepal’s external sector

Kathmandu, Feb. 4: Nepal’s external sector showed strong improvement in the first half of the current fiscal year 2025/26, driven by a sharp rise in remittance inflows, a robust current account surplus, and a significant buildup of foreign exchange reserves.

According to the macroeconomic and financial situation report based on first six months of the current fiscal year 2025/26, the remittance inflows increased by 39.1 per cent to Rs. 1,062.93 billion during the review period, compared to a modest 4.2 per cent growth in the same period last year.

In the mid-December, 2025 to mid-January, 2026 period (Poush), remittances stood at Rs. 192.62 billion, up sharply from Rs. 122.44 billion a year earlier.

In the US dollar terms, remittance inflows increased by 32.3 per cent to 7.50 billion in the review period. 

Such inflow had increased by 2.7 per cent in the same period of the previous year. 

Net secondary income (net transfer) reached Rs. 1168.02 billion in the review period. 

Such income was Rs. 833.86 billion in the same period of the previous year. 

Despite strong remittance growth, the number of Nepali workers taking first-time approval for foreign employment declined during the review period.

The number of Nepali workers, both institutional and individual, taking first-time approval for foreign employment stands at 206,807 and taking approval for renewed entry stands at 194,733 in the review period. 

In the same period of the previous year, such numbers were 230,439 and 162,628, respectively. 

Forex reserves total Rs. 3,242 billion, cover imports for over 21 months 

Similarly, the country's gross foreign exchange reserves rose by 21.1 per cent to Rs. 3,242.45 billion in mid-January 2026 from Rs. 2,677.68 billion in mid-July 2025. In US dollar terms, the gross foreign exchange reserves increased by 15.2 per cent to 22.47 billion in mid-January 2026 from 19.50 billion in mid-July 2025. 

Of the total foreign exchange reserves, the reserves held by NRB increased by 19.4 per cent to Rs. 2884.08 billion in mid-January 2026 from Rs. 2414.64 billion in mid-July 2025.

According to NRB, reserves held by banks and financial institutions (except NRB) increased by 36.2 per cent to Rs. 358.37 billion in mid-January 2026 from Rs. 263.04 billion in mid-July 2025. 

The share of Indian currency in total reserves stood at 22.3 per cent in mid-January 2026. 

Based on imports over the last six months, Nepal’s reserves are sufficient to cover 21.4 months of merchandise imports and 18.1 months of merchandise and services imports. 

Key reserve adequacy indicators also improved, with reserves-to-GDP at 53.1 per cent, reserves-to-imports at 150.7 per cent, and reserves-to-M2 at 40.5 per cent, all significantly higher than mid-July 2025 levels.

Current account surplus rises to Rs. 429.91 billion

Meanwhile, the current account recorded a surplus of Rs. 429.91 billion, more than double the Rs. 165.67 billion surplus of the previous year. 

In US dollar terms, the current account registered a surplus of 3.03 billion in the review period, compared to a surplus of 1.23 billion in the same period of the previous year. 

In the review period, net capital transfer amounted to Rs. 10.76 billion. 

In the same period of the previous year, such a transfer amounted to Rs. 4.29 billion.

Similarly, during the review period, Rs. 8.17 billion in foreign direct investment (equity only) was received. 

In the same period of the previous year, foreign direct investment inflows (equity only) amounted to Rs. 6.48 billion. 

Overall, the Balance of Payments (BOP) recorded a strong surplus of Rs. 501.24 billion, compared to Rs. 249.26 billion in the previous year. 

In US dollar terms, the BOP remained at a surplus of Rs. 3.54 billion in the review period, compared to a surplus of Rs. 1.85 billion in the same period of the previous year.