Nepal’s cconomy shows resilience with record reserves and low inflation

January 9, 2026, 03:54:27 PM |

KATHMANDU: Nepal’s latest economic report reveals a period of significant financial stability and growth. Consumer price inflation has dropped to just 1.63%, marking a major decrease from the 6.05% recorded at the same time last year. This cooling of prices is largely due to a decrease in food costs, which fell by over 2%.

On the financial side, Nepal’s foreign exchange reserves have surged to an impressive Rs. 3201.47 billion ($22.13 billion), providing enough cover for over 18 months of imports. A massive 35.6% jump in money sent home by Nepalis working abroad—remittances—has been a primary driver of this growth. While the country still spends more on imports than it earns from exports, the overall balance of payments remains in a healthy surplus.

Top 10 Key Economic Points

Inflation Drops Sharply: The yearly inflation rate fell to 1.63% in mid-December 2025, compared to 6.05% a year ago.
Food Prices Decrease: Food and beverage costs actually went down by 2.05%, with vegetable prices specifically dropping by 8.54%.
Massive Foreign Reserves: Total foreign exchange reserves reached Rs. 3201.47 billion ($22.13 billion), enough to pay for 18.2 months of imports.
Remittance Boom: Money sent home by overseas workers increased by 35.6%, totaling Rs. 870.31 billion in just five months.
Export Growth: Merchandise exports shot up by 58.2%, reaching Rs. 116.51 billion.
Trade Deficit Widens: While exports grew, imports also rose by 15.8%, leading to a total trade deficit of Rs. 649.68 billion.
Strong Balance of Payments: The overall balance of payments (the difference between money entering and leaving the country) stayed in a surplus of Rs. 421.89 billion.
Government Revenue and Spending: The government collected Rs. 406.30 billion in revenue but spent significantly more, with total expenditure reaching Rs. 564.46 billion.
Lower Interest Rates: The average lending rate for commercial banks decreased to 7.26%, making it cheaper for people and businesses to borrow money.
Currency Value: The Nepalese rupee weakened by 5.1% against the US dollar, with the exchange rate standing at Rs. 144.37 per dollar in mid-December.