Nepali rupee sails past 110 mark

Kathmandu February 23-Nepali rupee has plunged below 110 mark against the US dollar after fluctuating within a band of 109.30 and 109.96 for the last 11 days. The rupee, which closed at 109.84 against the greenback today, will lose eight paisa by the time the market opens on Tuesday, to trade at another historic low of 110.04, shows the reference rate of Nepal Rastra Bank.

With this loss, Nepali rupee has shed over seven per cent in value since the beginning of this fiscal year on July 17. Nepali currency has lately been taking a beating as Indian rupee has continued to weaken. Nepali rupee takes a dip whenever Indian currency weakens because Nepali rupee is pegged with the Indian currency at 1.6. Today, Indian currency fell to as low as 68.69 against the US dollar during the intra-day trading, before closing at 68.60 — the lowest since August 28, 2013.

Depreciation in Indian rupee, which has lowered the value of Nepali currency, is not expected to benefit exporters in Nepal, who have to deal with prolonged hours of power cuts and other structural problems, which erode export competitiveness. A weak currency, therefore, has never been able to significantly raise exports from the country.

Instead, weak currency is likely to build inflationary pressure here, because it will make imports expensive in ‘net importing’ country. However, weak currency will benefit recipients of remittance here, as they will get more Nepali currency while exchanging money sent by Nepalis working abroad.