The Nepali Rupee faced further devaluation as the US Dollar surged to a staggering Rs 133.97, marking a notable appreciation against the national currency. Nepal Rastra Bank (NRB) responded by fixing the buying rate for one US dollar at Rs 133.37 and the selling rate at Rs 133.97 on the same day.
This recent spike follows a previous record set on April 17, where the USD 1 was valued at Rs 133.96, signaling a continuous upward trend in the dollar’s strength against the Nepali Rupee.
The devaluation of the Nepali Rupee is partly attributed to the weakening of the Indian Rupee, to which the Nepalese currency is pegged. As the Indian Rupee depreciates, it exerts downward pressure on the Nepali Rupee against the US Dollar.
While the appreciation of the dollar may benefit remittances sent by migrant workers and income from exports, Nepal’s limited export volume restricts the potential gains from this development.
Moreover, the surge in the US Dollar’s value poses challenges for development projects, as the country heavily relies on imports for machinery and equipment. The increased cost of imports due to the stronger dollar could strain project budgets and delay crucial infrastructure initiatives.
Furthermore, the appreciation of the US Dollar threatens to exacerbate inflation and deplete foreign currency reserves significantly. Nepal’s high import dependency compared to export further compounds the pressure on foreign reserves, posing risks to the country’s balance of payments.
In conclusion, while the appreciation of the US Dollar may have certain benefits, its broader implications on the Nepali economy necessitate careful monitoring and strategic interventions to mitigate potential adverse effects.
