KATHMANDU: Nepal’s external sector showed strong improvement in the first month of the current fiscal year, with the current account remaining at a surplus of Rs 78.14 billion, more than double the Rs 33.08 billion recorded in the same period last year, according to the Nepal Rastra Bank (NRB).
In dollar terms, the current account posted a surplus of USD 561 million in the review period, up from USD 246.8 million in the previous year, the central bank stated on Monday while releasing its Current Macroeconomic and Financial Situation report based on data ending mid-August.
Foreign direct investment (FDI), however, saw a year-on-year decline. Nepal received Rs 691.5 million in FDI (equity only) in the first month of FY 2025/26, compared to nearly Rs 800 million in the same period last year.
Net capital transfer, on the other hand, rose sharply, amounting to Rs 1.04 billion, up from just Rs 223.2 million a year earlier.
The Balance of Payments (BOP) also remained favorable, posting a surplus of Rs 89.30 billion in the review period against Rs 40.90 billion in the corresponding period of the previous fiscal year.
Foreign exchange reserves expanded significantly, rising 4.8 percent to Rs 2806.04 billion in mid-August 2025 from Rs 2677.68 billion in mid-July 2025. Of this, reserves held by NRB increased 4 percent to Rs 2511.45 billion, while those held by banks and financial institutions surged 12 percent to Rs 294.58 billion over the same period.
Based on the import trends of the first month of FY 2025/26, the NRB said the foreign exchange holdings of the banking sector are sufficient to cover 20.4 months of prospective merchandise imports, and 16.6 months of merchandise and services imports combined.
Economists view the robust surplus in current account and BOP as a reflection of strong remittance inflows and subdued imports, though the slowdown in FDI underscores lingering concerns about Nepal’s investment climate.
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