Along with the record gain, the domestic forex market on Monday witnessed one of its wildest upheavals in recent memory, forcing the central bank to suspend dollar transactions for the day. "The swing was so wide that we were not in a position to assess possible gains or losses," said an official of NRB responsible for monitoring exchange rates.
The unexpected upheavals also compelled FEDAN, an association of commercial banks that deals with foreign exchange, to revise exchange rates three times on Monday, whereas rates that are fixed on a given day are not normally changed in the course of that day.
The previous record of overnight gain was registered on October 13, 2008 when the rupee strengthened by Rs 2.20 against the US dollar.
Amid the swing, Nepal Rastra Bank today fixed Rs 77.05 per dollar for Tuesday´s transactions whereas the rate fixed for Monday was Rs 79.30 per dollar. This level is the rupee´s strongest since December 23, 2008, when the exchange rate was fixed at Rs 76.85 per dollar.
The Indian rupee also gained by 3.2 percent against the greenback Monday to post its biggest single-day gain in more than a decade and close at Indian Rs 47.88 per dollar, whereas it had closed at Indian Rs 49.41 on Friday.
Indian experts have attributed the gain to the outcome of the Indian election which gave the ruling UPA coalition a decisive mandate to rule for another five years. According to Indian media, the 17.2 percent rise in the Indian stock market is testimony to strengthened investor confidence in India.
Since Nepal maintains a fixed exchange rate with the Indian currency, any fluctuations seen in the Indian rupee are directly reflected in the domestic currency.
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