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Nepali rupees falls further as Indian currency depreciates against dollars

KATHMANDU: Nepali rupees has suffered continuous fall as it has depreciated further against US dollars for the last one month.

Nepal Rastra Bank (NRB) has fixed the selling rate of one US dollar at Rs.114.96 for Sunday while it has fixed the buying rate of a US dollar at Rs 114.36, according to the exchange rate report of NRB.

Under the current system, the market exchange rates quoted by different commercial banks may differ, according to the NRB.

In a month, Nepali rupees depreciated by Rs. 3.69 per US dollar. As of July 25, 2019, a dollar could fetch Rs. 110.67.

Nepali rupee depreciation reached all-time low in October of 2018 as the value of Nepali rupee slid to 119.33 against a US dollar. But after a few weeks the value of Nepali rupee improved to Rs. 110 against a dollar.

According to NRB executive director Dr. Gunakar Bhatta, the value of the Nepali rupee has declined due to the depreciation of the Indian currency against the dollar.

“The devaluation of the Indian currency against the U.S. dollar has directly affected the Nepali currency as it is pegged to the Indian currency,” he added.

Nepali rupee has a fixed exchange rate of Rs 160 for IRs 100.

According to him, foreign investors who are investing in India were encouraged to withdraw their investment from the country due to Kashmir crisis resulting in the depreciation of Indian rupees.

He said that appreciation of US dollar against Nepalese currency would push inflation because the price of imported goods would increase following the depreciation of Nepali rupee.

He, however, said that positive effect will be seen in the increased value of remittance sent home by migrant workers and income from export.

Likewise, investors of the world are attracted to invest in dollar instead of shares and petroleum sector which also support to strong dollar, economist said Dr. Chandra Mani Adhikari.

Dr. Adhikari claimed that inflation of the country would go higher than 6 per cent targeted by the budget this year due to devaluation of Nepali currency.

The appreciation of dollar will also hit the development works and increase its cost as the country is compelled to import almost all the machinery and other equipment related to construction paying a high price.

He, however, said that it was necessary to control the import of luxurious and unnecessary goods to control its effect in our economy.

“In my view, the value of US dollar will further increase and reach to the value witnessed a year ago,” Dr. Adhikari said.

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