KATHMANDU, Nov 3: The Nepali rupee dipped to a historic record low against the US dollar with Nepal Rastra Bank (NRB) fixing the exchange rate at Rs 133.57 per US dollar for Thursday.
Last time, the exchange rate stood at Rs 133.54 per US dollar on September 20, this year.
Rupee slumps to record low against dollar
Since the Nepali currency is pegged with the Indian currency, the weakening of the Indian currency against the dollar has led to the depreciation of the Nepali currency. According to Indian media, the price of USD has been on the rise amid the expectations that the US Federal Reserve will maintain interest rates at a higher level. “This has prompted the investors to sell their long-term maturity treasuries to get the USD for investment, resulting in the boosting of the US 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. A stronger dollar can provide some relief to Nepal's export trade, although the limited volume of goods exported makes it challenging to fully capitalize on the exchange rate advantage. Similarly, income in the tourism sector is expected to improve, benefiting exporters of Nepali goods, including handicrafts.
However, being an economy with high reliance on imported goods, the domestic market could be affected by higher prices for goods purchased in dollars from abroad. It increases the market price of goods as the country imports most of the raw materials including the capital goods necessary to produce finished goods, according to economists.
