Foreign Exchange Reserves Sufficient for 19.2 Months of Merchandise and Services Imports

June 10, 2026 | Investopaper

The foreign exchange reserves increased 38.3 percent to Rs.3704.55 billion in mid-May 2026 from Rs.2677.68 billion in mid-July 2025. In US Dollar terms, the gross foreign exchange reserves increased 24.0 percent to 24.19 billion in mid-May 2026 from 19.50 billion in mid-July 2025.

 Of the total foreign exchange reserves, the reserves held by NRB increased 36.6 percent to Rs.3298.38 billion in mid-May 2026 from Rs. 2414.64 billion in midJuly 2025. Reserves held banks and financial institutions (except NRB) increased 54.4 percent to Rs.406.17 billion in mid-May 2026 from Rs.263.04 billion in mid-July 2025. The share of Indian currency in total reserves stood at 20.6 percent in mid-May 2026.

Based on the imports of the ten months of 2025/26, the foreign exchange reserves of the banking sector are sufficient to cover the prospective merchandise imports of 22.6 months, and merchandise and services imports of 19.2 months. The ratio of reserves-to-GDP, reserves-to-imports and reserves-to-M2 stood at 60.7 percent, 159.7 percent, and 43.3 percent respectively in mid-May 2026. Such ratios were 43.8 percent, 128.1 percent, and 34.1 percent respectively in mid-July 2025.

Exports & Imports

During the ten months of 2025/26, merchandise exports increased 14.2 percent to Rs.248.96 billion compared to a growth of 72.7 percent in the same period of the previous year.

Destination-wise, exports to India and other countries increased 16.1 percent and 9.5 percent, respectively, whereas exports to China decreased 41.7 percent. Exports of soybean oil, cardamom, palm oil, noodles, and jute goods, 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 ten months of 2025/26, merchandise imports increased 14.8 percent to Rs.1692.64 billion compared to a growth of 13.1 percent a year ago. Destination-wise, imports from India, China, and other countries increased 10.6 percent, 21.4 percent, and 20.7 percent, respectively. Imports of petroleum products, chemical fertilizer, silver, transport equipment, vehicle and spare parts, and crude soyabean oil, among others, increased, whereas imports of hot rolled sheet in coil, edible oil, garlic, pulses, and M.S. wire rod, bars, coils, among others, decreased in the review period.

Total trade deficit increased 14.9 percent to Rs.1443.68 billion during the ten months of 2025/26. Such a deficit had increased 6.7 percent in the corresponding period of the previous year. The export-import ratio decreased to 14.7 percent in the review period from 14.8 percent in the corresponding period of the previous year.

Custom-wise Foreign Trade (First 10 Months)

(Rs. in million)

Source: Based on customs data

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