Nepali Rupee Hits Record Low Against US Dollar; Impact on Economy

The United States Dollar has risen to unparalleled heights against the Nepali rupee, achieving an all-time high, as reported by the Nepal Rastra Bank (NRB).

The NRB stated that on Wednesday, the purchasing rate for the US dollar was set at Rs 133.8, whereas the selling rate was Rs 133.68. This established a new benchmark for dollar exchange rates in Nepal, marking the highest exchange rate ever recorded for the US currency within the nation.

Previously, on November 11, the value of the dollar had reached Rs 133.65. A higher exchange rate can be beneficial for remittances sent from other countries. However, Nepal's import-driven economy experiences a negative impact as payments for imports must be made in dollars.

The country's economic performance reaps advantages from a stronger dollar in areas such as remittance earnings, tourism sector income, and export trading activities. Nonetheless, when imports surpass exports in Nepal's foreign commerce, payments are made in dollars, resulting in an increased trade deficit. This consequently has a detrimental effect on both the exchange rate and foreign exchange reserves.

In addition, when the value of the dollar escalates, it leads to heightened prices for imported goods, a potential increase in fuel costs, and larger amounts of national foreign debts and interest payments as the dollar's value continues to rise as Nepal has to pay in US Dollar to the foreign exporters.