NRB starts work out to set up sovereign wealth fund to invest excess Forex stock

Kathmandu / June 11: Nepal Rastra Bank (NRB) has started a study to finalise the modality to set up the ‘sovereign wealth fund (SWF)’ in order to utilise the accumulated amount of excess foreign currency reserves.

A SWF is a state-owned investment pool funded from the government’s surplus revenue or trade surplus and foreign currency reserves with the state. Under this mechanism, the government utilizes the surplus amount to invest globally in a variety of assets including stocks, bonds or real estate in other countries.

The SWF is under practice by a number of countries including China, according to Forbes, a well known magazine. However, it is the first time that Nepal has been looking forward to adopting the mechanism.

As per NRB Spokesperson Guru Prasad Paudel, the central bank has been working to set up a modality to operate SWF. “After the working guidelines are finalized, the SWF will come into action,” he said.

The record with the NRB shows that the country’s foreign exchange reserves have crossed the Rs 3.7 trillion mark as of mid-May of the current fiscal year. The reserves surged by 38.3 percent, reaching Rs 3.704 trillion in 10 months, up from Rs 2.677 trillion at the end of the previous fiscal year in mid-July 2025.

The foreign exchange reserves of the banking sector are sufficient to cover the prospective merchandise imports of 22.6 months, and merchandise and services imports of 19.2 months. The amount is way too high compared to the government’s estimated minimum reserve amount that is sufficient to cover the country’s imports for seven months.

In addition, remittance inflow growth has also been impressive in recent days. As per the NRB records, the country’s earning from remittance increased 41.2 percent to Rs 1.916 trillion in the ten months of FY 2025/26 compared to an increase of 13.3 percent in the same period of the previous year.

In addition, Nepal’s balance of payments also remained at a surplus of Rs 863.56 billion in the review period. Such a surplus was Rs 438.52 billion in the previous year. In US Dollar terms, the BoP remained in surplus 5.98 billion in the review period, compared to 3.23 billion in the same period of the previous year.

Citing a surging amount of foreign currency reserves in the state’s treasury, the government while announcing budget for FY 2026/27, has talked about utilizing the funds via establishing the SWF. “The stock can manage imports for over 18 months, while its rate of return is only four percent per annum,” Finance Minister Swarnim Wagle stated in the budget announcement.