Rupee plunges to 94.25 per dollar

Kathmandu, June 20 –  The Nepali rupee plunged to another record low on Wednesday with the central bank fixing the exchange rate at Rs 94.25 per US dollar for Thursday. The Nepali rupee’s freefall is an effect of the steady depreciation of the Indian rupee with which it is pegged.

According to the Indian media, the rupee began going downhill after foreign investors in India, concerned by bleak growth prospects, switched to the greenback.

Meanwhile, spokesman of Nepal Rastra Bank (NRB) Bhaskar Mani Gnawali said the sharp drop of the Nepali rupee could be the result of demand for the dollar outstripping supply in the Indian market. “Indian companies which have to make payments on a huge scale have pushed up demand for the US dollar in the Indian market,” he said.

However, Gnawali said that the fast rise of the US dollar was a temporary phenomenon. “The exchange market will be fairly stable in the long run through demand and supply mechanism,” he added.