Remittances Surge 35.4% Y-o-Y in Q1 FY26, FDI (Equity Only) Falls

Remittance inflows jumped 35.4 percent year-on-year to Rs 553.31 billion in the first quarter of the fiscal year 2025/26, according to the latest Current Macroeconomic and Financial Situation Report released by Nepal Rastra Bank (NRB) on Sunday, November 16. This marks a significant acceleration from the 11.9 percent growth recorded in the same period last year.

In US dollar terms, remittance inflows rose 29.2 percent to $3.94 billion, compared to a 10.6 percent increase in the same period of FY25.

However, foreign direct investment (equity only) fell to Rs 1.74 billion in the review period, down from Rs 4.81 billion in the same period of FY25.

Remittances, during mid-September to mid-October (Asoj), totalled Rs 201.22 billion, up from Rs 144.17 billion in the same month a year earlier. 

The surge in remittances contributed to a strong buildup in foreign exchange reserves – an 11.3 percent rise to Rs 2,979.81 billion by mid-October 2025 from Rs 2,677.68 billion in mid-July 2025.

In dollar terms, reserves climbed 8.7 percent to $21.21 billion in mid-October from $19.50 billion in mid-July. NRB-held reserves rose 10.5 percent to Rs 2,667.7 billion, while reserves held by banks and financial institutions (excluding NRB) increased 18.7 percent to Rs 312.1 billion. Indian currency accounted for 24 percent of total reserves.

Based on recent import trends, Nepal’s current forex reserves are sufficient to cover 19.9 months of merchandise imports and 16.4 months of combined merchandise and services imports. Key ratios improved over the quarter: reserves-to-GDP rose to 48.8 percent (from 43.8 percent), reserves-to-imports to 136.6 percent (from 128.1 percent), and reserves-to-M2 to 36.8 percent (from 34.1 percent).

The report also highlighted a rise in Nepalis seeking foreign employment. First-time approvals for foreign employment reached 123,459, while approvals for entry renewals were 77,257, up from 110,654 and 59,939 respectively in the same period last year.

Nepal’s current account recorded a surplus of Rs 237.59 billion ($1.69 billion) in the review period, compared to Rs 115.36 billion ($860 million) a year earlier. Net capital transfers amounted to Rs 5.55 billion, up from Rs 2 billion, while foreign direct investment (equity only) fell to Rs 1.74 billion from Rs 4.81 billion.

The country’s Balance of Payments (BOP) remained in surplus at Rs 264.03 billion ($1.88 billion), up from Rs 184.99 billion ($1.38 billion) in the same period of FY25.