Foreign Exchange Reserves Surge by 26.2%

Nepal’s gross foreign exchange reserves have seen a significant increase, rising by 26.2 percent to reach Rs 1942.4 billion in mid-May 2024 from Rs 1539.36 billion in mid-July 2023, according to data released today by Nepal Rastra Bank (NRB).

In US dollar terms, the gross foreign exchange reserves climbed 24.2 percent to $14.54 billion in mid-May 2024, up from $11.71 billion in mid-July 2023.

The NRB data also revealed that of the total foreign exchange reserves, those held by NRB itself surged by 28 percent, reaching Rs 1722.02 billion in mid-May 2024 from Rs 1345.78 billion in mid-July 2023. Meanwhile, reserves held by banks and financial institutions increased by 13.8 percent, totaling Rs 220.38 billion in mid-May 2024 compared to Rs 193.59 billion in mid-July 2023.

Additionally, the share of Indian currency in the total reserves stood at 22.1 percent in mid-May 2024.

Foreign Exchange Adequacy Indicators

The NRB report also highlighted the adequacy of the foreign exchange reserves. Based on the import data for the first ten months of the fiscal year 2023/24, the foreign exchange reserves of the banking sector are sufficient to cover 15.1 months of prospective merchandise imports and 12.6 months of combined merchandise and service imports.

This substantial increase in foreign exchange reserves is a positive indicator of Nepal’s economic stability and resilience, providing a stronger buffer against external shocks and supporting the country’s international trade commitments.