According to the Nepal Rastra Bank (NRB), the Nepali Rupee fell to a six-month low versus the United States dollar on Thursday, with the price of the American currency pegged at Rs 120.27 per dollar for the entire day.
Previously, the Nepali rupee hit a record low of Rs 121.69 per dollar in April 2020, setting a new record low. The last time this happened was on April 26, 2021, when the currency rate dropped to Rs 120.32 per dollar. According to the most recent data available on Thursday, the US dollar dropped as low as Rs 116.21 per dollar before beginning an upward trend.
According to media reports, the dollar’s value has been rising steadily since the United States’ economy began to revive, resulting in more work chances for job-seeking individuals. In response, the Nepali currency, which is tied to the Indian rupee, has suffered as a result of the declining trend of the Indian currency relative to the dollar in recent months.
At a time when Nepal is under pressure to increase its foreign currency reserves, the depreciation of its indigenous currency has the potential to exacerbate the country’s net inflow of foreign currency. Furthermore, because the country is heavily reliant on imported commodities, it has the potential to drastically raise the market price.
As stated by NRB authorities, the depreciation of the home currency could be beneficial for remittances as well as for tourism, and other sectors where the profits are denominated in US dollars, among other things. Nepal, on the other hand, is less likely to gain from the increase in exports because it has a tiny basket of exportable goods.