Nepal’s forex reserve reaches an all-time high

Nepal’s foreign exchange reserves have reached an all-time high, standing at 18.40 billion US dollars, according to the latest Macroeconomic and Financial Situation Report published by the Nepal Rastra Bank (NRB). This significant rise is largely attributed to a strong surge in remittance inflows, which saw a 10.5 percent increase in USD terms. In local currency, the gross foreign exchange reserves reached NPR 2,512.95 billion by mid-May 2025—marking a 23.1 percent increase compared to the same period last year.

Remarkably, a substantial NPR 86.11 billion was added to the reserves in just one month between mid-April and mid-May 2025. This has considerably strengthened Nepal’s external financial position. During the same period, both imports and exports experienced growth, rising by 13.1 percent and 72.7 percent, respectively. Export destinations such as India, China, and other countries saw respective increases of 104.7 percent, 5.1 percent, and 4.2 percent. Key export items contributing to this growth included soybean oil, polyester yarn and thread, tea, jute goods, and oil cakes. Despite these improvements, the country continues to face a high trade deficit.

While foreign direct investment (FDI), foreign aid, tourism, and exports are traditionally considered major sources of foreign currency earnings, in Nepal’s case, it is remittance that plays the most vital role. The contribution of remittance is particularly significant due to the widespread global presence of Nepali workers. Currently, they are working in 174 countries, with large populations employed in India, the Middle East, Malaysia, South Korea, Japan, Australia, New Zealand, and the European Union. These skilled and unskilled workers play a crucial role in strengthening the national economy.

During the review period, 405,610 Nepali workers received first-time approvals for foreign employment, while 280,314 were approved for renewal entry. As a result of these workforce movements and steady inflows, Nepal's foreign exchange reserves now account for a robust 44 percent of the country’s gross domestic product (GDP), highlighting the critical role remittances continue to play in sustaining the national economy.