Nepal Rastra Bank, the central bank, reported a substantial increase in its overall financial size, with its total balance sheet exceeding Rs 40 trillion by mid-September 2026. This growth occurred even as the total currency in circulation in the market decreased during the same period.
According to the monthly financial statement released by Nepal Rastra Bank for the period ending Bhadra 2083 (mid-September 2026), the total currency in circulation stood at Rs 794.02 billion. This marks a decrease of approximately Rs 7.62 billion from the Rs 801.62 billion recorded at the end of Asar 2083 (mid-July 2026). Conversely, the central bank’s total assets and liabilities, which were Rs 38.7498 trillion at the end of Asar 2083, surged to Rs 40.4407 trillion by the end of Bhadra 2083.
The Rs 169.09 billion increase in the central bank’s balance sheet over two months was primarily driven by a significant rise in foreign assets and an accumulation of funds in government accounts. Foreign currency assets grew from Rs 37.30 trillion in mid-July 2026 to Rs 38.9978 trillion by mid-September 2026. These foreign assets are strategically invested in foreign securities (Rs 27.4333 trillion), fixed deposits in foreign banks (Rs 6.3974 trillion), and gold certificates (Rs 2.5397 trillion) to manage security, liquidity, and returns.
The decrease in currency in circulation is mainly attributed to the increased funds deposited in government accounts and Nepal Rastra Bank’s efforts to absorb excess liquidity through open market operations and the issuance of bonds. Nepal maintains a dual foreign exchange policy, with a fixed exchange rate against the Indian Rupee since Baishakh 1, 2017 (BS), and an open market exchange rate for other convertible foreign currencies since Falgun 1, 2049 (BS). This policy helps maintain the external value of the Nepali currency. Increased remittance inflows have also contributed to the growth of foreign exchange reserves.
Nepal Rastra Bank released its Monetary Policy for the fiscal year 2083/84 on Asar 23, 2083 (July 7, 2026). The policy adopts a “cautiously flexible” approach to support the government’s ambitious target of 7 percent economic growth, while aiming to keep average inflation within 5.5 percent for the upcoming year. The central bank has also introduced new measures to reduce inactive bank accounts, with an action plan set for implementation by the end of Poush 2083 (mid-January 2027).
Further detailed analysis is needed to understand the long-term economic implications of both the decrease in currency in circulation and the increase in foreign assets. Specific reasons and sources for the growth in government account funds remain unclear. Additionally, the detailed challenges and strategies for achieving the monetary policy’s inflation and economic growth targets are not yet fully transparent.
