KATHMANDU, March 8: The Nepali currency on Tuesday plunged to a record low against the US dollar with Nepal Rastra Bank (NRB) fixing the exchange rate at Rs 123.44 per dollar.
Earlier in April 2020, the US dollar appreciated at its highest level against the Nepali currency at Rs 121.69 per dollar. Later on, the USD plunged to as low as Rs 116.15 a dollar in March 2021 before taking an upward graph, show the records with NRB.
The greenback posted a single day gain of Rs 1.28 a dollar on Tuesday. The Nepali currency that is pegged with the Indian rupee has been affected with the falling graph of the Indian currency against dollar in recent days.
According to the Indian media, the Indian currency plummeted to an all-time low of INR 77.10 per dollar on Monday. The fall in the exchange rate of the Indian currency has been attributed to the ongoing Russia-Ukraine rift.
At a time when Nepal has been facing pressure on foreign currency reserves, the depreciation of its domestic currency could further worsen the country’s net inflow amount. It could raise the market price significantly as the country is dependent on imported goods.
In addition, the costs of projects are likely to escalate as the capital goods need to be imported for an expensive dollar. Similarly, the government could feel the heat of debt financing at the soaring price of the dollar.
According to NRB officials, the weakening of the domestic currency could prove to be a boon for remittances, tourism and exports, among other sectors where the earnings are in the US dollar. However, Nepal is less likely to benefit from its export growth as it has a small basket of exportable items.