Foreign Exchange Reserves Sufficient for 18.2 Months of Merchandise and Services Imports

January 12, 2026 | Investopaper

The gross foreign exchange reserves increased 19.6 percent to Rs.3201.47 billion in mid-December 2025 from Rs.2677.68 billion in mid-July 2025. In the US dollar terms, the gross foreign exchange reserves increased 13.5 percent to 22.13 billion in mid-December 2025 from 19.50 billion in mid-July 2025.

Of the total foreign exchange reserves, the reserves held by NRB increased 18.7 percent to Rs.2866.47 billion in mid-December 2025 from Rs. 2414.64 billion in mid-July 2025. Reserves held by banks and financial institutions (except NRB) increased 27.4 percent to Rs.335 billion in mid-December 2025 from Rs.263.04 billion in mid-July 2025. The share of Indian currency in total reserves stood at 22.2 percent in mid-December 2025.

Based on the imports of the five months of 2025/26, the foreign exchange reserves of the banking sector is sufficient to cover the prospective merchandise imports of 21.7 months, and merchandise and services imports of 18.2 months. The ratio of reserves-to-GDP, reserves-to-imports and reserves-to-M2 stood at 52.4 percent, 151.9 percent, and 39.4 percent respectively in mid-December 2025. Such ratios were 43.8 percent, 128.1 percent, and 34.1 percent respectively in mid-July 2025.

Exports & Imports

During the five months of 2025/26, merchandise exports increased 58.2 percent to Rs.116.51 billion compared to a growth of 16.5 percent in the same period of the previous year. Destination-wise, exports to India and other countries increased 82.7 percent and 5.5 percent respectively whereas exports to China decreased 73.3 percent. Exports of soyabean oil, cardamom, palm oil, jute goods, and shoes and sandals 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 five months of 2025/26, mercandise imports increased 15.8 percent to Rs.766.19 billion compared to a growth of 3.0 percent a year ago. Destination-wise, imports from India, China, and other countries increased 5.7 percent, 24.6 percent, and 40.8 percent respectively. Imports of crude soyabean oil, chemical fertilizer, gold, transport equipment, vehicle and spare parts, and silver among others increased whereas imports of hot rolled sheet in coil, garlic, edible oil, oil seeds and pulses products among others decreased in the review period.

Total trade deficit increased 10.5 percent to Rs.649.68 billion during the five months of 2025/26. Such a deficit had increased 1.5 percent in the corresponding period of the previous year. The export-import ratio increased to 15.2 percent in the review period from 11.1 percent in the corresponding period of the previous year.

Custom-wise Foreign Trade (First 5 Months)

(Rs. in million)

Source: Based on customs data

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