Nepal’s imports stay above Rs 200 billion for second straight month amid inflation, Weak rupee

KATHMANDU: Nepal’s merchandise imports crossed the Rs 200 billion mark for the second consecutive month, driven by surging international fuel prices, a weakening Nepali rupee and rising commodity costs in global markets, according to the latest customs data.

Data released by the Department of Customs show that imports remained above Rs 2 kharb (Rs 200 billion) in both Chaitra and Baisakh of the current fiscal year, reflecting growing pressure on Nepal’s external trade balance and foreign currency reserves.

The import bill stood at Rs 12.89 kharb (Rs 1.289 trillion) by the end of Falgun. It rose by Rs 2.01 kharb in Chaitra to reach Rs 14.90 kharb and increased further by Rs 2.02 kharb in Baisakh, pushing total imports to Rs 16.92 kharb (Rs 1.692 trillion) by mid-May.

The sharp rise comes as the Nepali rupee continues to weaken against the US dollar. On Friday, the exchange rate stood at around Rs 154 per US dollar, making imports significantly more expensive for Nepal’s import-dependent economy.

Fuel Prices and Weak Currency Driving Import Surge

Economists and officials point to escalating fuel prices in international markets—partly linked to geopolitical tensions in West Asia—and the depreciation of the Nepali currency as key reasons behind the growing import bill.

According to the latest data from the Department of Customs, Nepal spent Rs 299.50 billion on fuel imports during the first 10 months of the fiscal year, up sharply from Rs 264.84 billion during the same period last year.

Although diesel import volume slightly declined, the cost surged significantly due to higher international prices.

Nepal imported 1.144 million kiloliters of diesel by Baisakh this fiscal year, slightly lower than 1.147 million kiloliters in the same period last year. However, diesel imports cost Rs 130.93 billion this year, compared to Rs 102.38 billion a year ago.

Petrol imports also rose, with Nepal importing 621,951 kiloliters valued at Rs 58.63 billion, compared to Rs 53.05 billion in the corresponding period last year.

Consumption Goods Continue to Dominate Imports

According to the latest macroeconomic classification by the Nepal Rastra Bank (NRB), consumer goods account for approximately 37.5 percent of Nepal’s imports, while intermediate goods make up 53.3 percent. Capital goods, crucial for industrial investment and productivity growth, represent only 9.2 percent of total imports.

The data indicate that Nepal’s economy remains heavily reliant on imported consumption and intermediate products rather than investment-driven capital imports.

Among the top imported products this year, crude soybean oil ranked second, with imports worth Rs 106 billion after 655.6 million liters entered Nepal.

Vehicle imports also increased significantly, reaching Rs 96.79 billion during the first 10 months of the fiscal year, compared to Rs 82.24 billion in the same period last year.

Nepal additionally imported smartphones worth Rs 39.39 billion and gold valued at Rs 25.78 billion, reflecting sustained consumer demand despite economic pressures.

Imports Up Nearly 15 Percent, Trade Deficit Widens

According to customs data, total imports during the first 10 months of the fiscal year increased by 14.82 percent compared to the same period last year.

Nepal imported goods worth Rs 14.74 kharb by Baisakh in the previous fiscal year, significantly lower than this year’s Rs 16.92 kharb.

Exports also improved, rising 14.25 percent year-on-year to Rs 248.96 billion by Baisakh. However, the increase in exports has not been enough to offset Nepal’s widening trade imbalance.

Total foreign trade volume reached Rs 19.41 kharb during the review period, marking a 14.75 percent increase compared to last year.

Nepal’s trade deficit widened by 14.92 percent to Rs 14.43 kharb, up from Rs 12.56 kharb during the same period last fiscal year.

The export share in total foreign trade slipped slightly to 12.82 percent by Baisakh, while imports continued to dominate with an 87.17 percent share.

Soybean Oil Tops Exports, Consumer Goods Dominate

On the export front, Nepal exported goods worth nearly Rs 250 billion in the first 10 months, though final consumption goods continued to dominate the export basket.

Soybean oil emerged as Nepal’s largest export product, contributing nearly Rs 101 billion in exports by Baisakh.

Cardamom ranked second at Rs 11.42 billion, followed by carpets worth Rs 8.48 billion, sunflower oil at Rs 7.41 billion and palm oil exports totaling Rs 5.56 billion.

According to NRB data, final consumption goods accounted for 69.4 percent of Nepal’s exports, intermediate goods made up 29.8 percent, while capital goods represented just 0.8 percent.

India and China Remain Nepal’s Key Trade Partners

Nepal conducted foreign trade with around 150 countries during the review period, but India and China remained its dominant trading partners.

Imports from India totaled Rs 974 billion during the first 10 months, while Nepal exported goods worth Rs 204 billion to India.

Imports from China stood at Rs 336 billion, while exports to China remained negligible at just Rs 1.39 billion, highlighting Nepal’s persistent trade imbalance with its northern neighbor.

Argentina emerged as Nepal’s third-largest trading partner, with imports totaling Rs 95.27 billion, largely driven by edible oil imports.

The United Arab Emirates (UAE) accounted for Rs 49.74 billion in imports, while exports to the Gulf nation stood at Rs 1.57 billion.

Imports from the United States reached Rs 25.91 billion, while Nepal exported goods worth Rs 16.58 billion to the UAE during the same period.