Foreign Exchange Reserves Sufficient for 17.8 Months of Merchandise and Services Imports

October 16, 2026 | Investopaper

The gross foreign exchange reserves increased 4.3 percent to Rs.4065.78 billion in mid-September 2026 from Rs.3897.67 billion in midJuly 2026. In US dollar terms, the gross foreign exchange reserves increased 4.6 percent to 26.48 billion in mid-September 2026 from 25.31 billion in mid-July 2026.

Of the total foreign exchange reserves, the reserves held by NRB increased 4 percent to Rs.3610.76 billion in midSeptember 2026 from Rs. 3473.19 billion in mid-July 2026. Reserves held by banks and financial institutions (except NRB) increased 7.2 percent to Rs. 455.01 billion in mid-September 2026 from Rs. 424.48 billion in mid-July 2026. The share of Indian currency in total reserves stood at 21.3 percent in mid-September 2026.

 Based on the imports of the two months of 2026/27, the foreign exchange reserves of the banking sector are sufficient to cover the prospective merchandise imports of 20.9 months, and merchandise and services imports of 17.8 months. The reserves-to-GDP, reserves-to-imports, and reserves-toM2 ratios stood at 61.6 percent, 148.5 percent, and 44.9 percent, respectively, in mid-September 2026. These ratios were 59.1 percent, 163.4 percent, and 43.8 percent in mid-July 2026.

Exports & Imports

During the two months of 2026/27, merchandise exports increased 61.9 percent to Rs.76.59 billion compared to a growth of 88.6 percent in the same period of the previous year. Destination-wise, exports to India, China, and other countries increased 70.6 percent, 137.6 percent, and 22.7 percent, respectively. Exports of soybean oil, polyester yarn & thread, palm oil, zinc sheet and particle board, among others, increased, whereas exports of medicine (ayurvedic), tanned skin, pulses, Nepalese paper & paper products and herbs, among others, decreased in the review period.

Similarly, during the two months of 2026/27, merchandise imports increased 31.6 percent to Rs.401.52 billion compared to a growth of 16.2 percent a year ago. Destination-wise, imports from India, China, and other countries increased 27.4 percent, 17.2 percent, and 56.6 percent, respectively. Imports of petroleum products, chemical fertilizer, crude soybean oil, edible oil and transport equipment, vehicle & other vehicle spare parts, among others, increased, whereas imports of gold, rice/paddy, aircraft spare parts, polythene granules, medical equipment & tools, among others, decreased in the review period.

Total trade deficit increased 26.0 percent to Rs.324.93 billion during the two months of 2026/27. Such a deficit had increased 8.6 percent in the corresponding period of the previous year. The export-import ratio increased to 19.1 percent in the review period from 15.5 percent in the corresponding period of the previous year.

Custom-wise Foreign Trade (First 2 Months)

(Rs. in million)

Source: Based on customs data

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