NRW said it had received reports of low water levels and dry riverbeds in some locations, as well as reports of fish in distress and algal blooms.
It described the majority of river flows across Wales as “low or exceptionally low, as are groundwater levels”.
“Catchments in south east Wales have been particularly impacted, with rivers receiving very little rainfall in recent months, and the Usk and Wye recording persistently high river temperatures which can threaten fish populations,” said Rhian Thomas from NRW.
The body added drought can affect farmers who may need to find alternative water supplies and extra food for livestock due to reduced grass growth.
The rest of Wales will remain in “prolonged dry weather status”, but NRW said it would continue to monitor river flows, groundwater levels and its effect on the environment, land and agriculture.
The drought status has been declared based on environmental factors, rather than reservoir levels monitored by Dwr Cymru Welsh Water.
Welsh Water said it had no concerns about reservoir levels, with most close to what it “would expect at this time of year”.
A spokesperson added it was managing extra demand caused by the dry weather, but had no plans to introduce any temporary restrictions.