Nepal's Foreign Exchange Reserves Surge to All-Time High in FY 2024/25

Nepal has witnessed a significant strengthening of its external financial stability, as reflected in the continuous rise of its gross foreign exchange reserves. According to the latest data, the gross foreign exchange reserves reached a historic high of Rs. 2,426.8 billion by mid-April 2024/25, a sharp rise from Rs. 1,911.9 billion in mid-April 2023/24. This impressive growth of over Rs. 514.9 billion within a single fiscal year underscores a robust inflow of remittances, reduced import pressure, and cautious foreign currency expenditure policies implemented by Nepal Rastra Bank.

In dollar terms, the foreign exchange reserves stood at USD 17.63 billion as of mid-April 2024/25, up from USD 14.36 billion recorded during the same period in the previous fiscal year. This nearly USD 3.3 billion increase highlights the improved balance of payments position and growing investor confidence in Nepal’s economy. Compared to the pre-pandemic level of USD 11.65 billion in 2019/20, this surge indicates Nepal's gradual recovery from global shocks, including the COVID-19 pandemic and the subsequent economic disruptions.

Analyzing the annual trends, Nepal experienced a slight decline in reserves during FY 2021/22, when rupee-denominated reserves fell to Rs. 1,215.8 billion and dollar reserves dropped significantly to USD 9.51 billion—the lowest in the given timeline. This drop was primarily due to higher import bills and sluggish remittance inflows during the recovery phase post-COVID. However, a strong rebound began in FY 2022/23 with reserves increasing to Rs. 1,539.4 billion and USD 11.71 billion, fueled by policy corrections and tightening of import controls.

The most substantial jump occurred between FY 2022/23 and FY 2023/24, with gross reserves in local currency terms growing from Rs. 1,539.4 billion to Rs. 2,041.1 billion by year-end—a clear indicator of increased foreign currency accumulation. The mid-year adjustment for FY 2023/24 shows a slight drop to Rs. 1,911.9 billion, suggesting short-term fluctuations, possibly due to payments for imported goods or debt servicing, but the momentum resumed strongly in FY 2024/25.

Overall, the data paints a positive picture of Nepal’s external sector health, driven by prudent monetary policies, sustained remittance inflows, and improved tourism and service sector performance. The growing reserves not only provide a cushion against external shocks but also enhance Nepal's ability to fund imports and repay foreign debt, thereby boosting macroeconomic stability and investor sentiment.