Foreign Exchange Reserves Sufficient for 18.5 Months of Merchandise and Services Imports

April 3, 2026 | Investopaper

The gross foreign exchange reserves increased 27.5 percent to Rs.3413.77 billion in mid-March 2026 from Rs.2677.68 billion in mid-July 2025. In US dollar terms, the gross foreign exchange reserves increased 18.3 percent to 23.08 billion in mid-March 2026 from 19.50 billion in mid-July 2025.

Of the total foreign exchange reserves, the reserves held by NRB increased 25.7 percent to Rs.3035.11 billion in mid-March 2026 from Rs. 2414.64 billion in mid-July 2025. Reserves held by banks and financial institutions (except NRB) increased 44.0 percent to Rs.378.66 billion in mid-March 2026 from Rs.263.04 billion in mid-July 2025. The share of Indian currency in total reserves stood at 21.0 percent in mid-March 2026.

Based on the imports of the eight months of 2025/26, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 21.4 months, and merchandise and services imports of 18.5 months. The ratio of reserves-to-GDP, reserves-to-imports and reserves-to-M2 stood at 55.9 percent, 153.8 percent, and 40.8 percent respectively in mid-March 2026. Such ratios were 43.8 percent, 128.1 percent, and 34.1 percent respectively in mid-July 2025.

Exports & Imports

During the eight months of 2025/26, merchandise exports increased 20.8 percent to Rs.191.11 billion compared to a growth of 57.2 percent in the same period of the previous year.

Destination-wise, exports to India and other countries increased 25.3 percent and 7.8 percent respectively whereas exports to China decreased 53.7 percent. Exports of soyabean oil, cardamom, palm oil, jute goods, and noodles among others increased whereas exports of zinc sheet, particle board, tea, woolen carpet and handicraft goods among others decreased in the review period.

Similarly, during the eight months of 2025/26, mercandise imports increased 12.5 percent to Rs.1289.25 billion compared to a growth of 11.2 percent a year ago.

Destination-wise, imports from India, China, and other countries increased 5.1 percent, 21.2 percent, and 26.0 percent respectively. Imports of crude soyabean oil, chemical fertilizer, silver, transport equipment, vehicle and spare parts and telecommunication equipments and parts among others increased whereas imports of edible oil, hot rolled sheet in coil, garlic, pulses and M.S. billet among others decreased in the review period.

Total trade deficit increased 11.2 percent to Rs.1098.14 billion during the eight months of 2025/26. Such a deficit had increased 6.2 percent in the corresponding period of the previous year. The export-import ratio increased to 14.8 percent in the review period from 13.8 percent in the corresponding period of the previous year.

Custom-wise Foreign Trade (First 8 Months)

(Rs. in million)

Source: Based on customs data

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