The Nepali currency has continued to weaken against the US dollar in recent days, primarily due to the performance of the Indian currency, to which the Nepali currency is pegged.
Over the past week, the exchange rate of the Nepali rupee has steadily declined. In early April, the selling rate for one US dollar stood at Rs 136.68. By Wednesday, it had climbed to Rs 138.33, and Nepal Rastra Bank fixed the selling rate at Rs 139.01 for Friday.
Although the US dollar has weakened against global currencies like the Euro, Swiss Franc, and Japanese Yen—often referred to as "safe haven" currencies—it has strengthened against the Indian rupee. This shift has directly affected the Nepali rupee, since Nepal’s exchange rate policy is tied to India's currency.
On Tuesday, the Indian rupee was trading at Rs 86.27 per dollar, which slipped further to Rs 86.69 by Wednesday. Based on this trend, Nepal Rastra Bank set corresponding rates for the Nepali rupee.
Economists say the depreciation of the Nepali rupee increases the cost of imports from countries other than India. With Nepal running a large trade deficit, a stronger dollar means the country must spend more on foreign goods.
Nepal Rastra Bank’s data shows that in the first eight months of the current fiscal year, Nepal imported goods worth Rs 1145 billion, while exports totaled only Rs 158 billion.
Economist Keshav Acharya warns that the rising value of the dollar and other major currencies is likely to push up the prices of imported goods. "Even though the global economic slowdown and trade war may reduce demand, supply chain disruptions could cause prices to rise,” he said.
He also noted that key imported items—such as petroleum products, vehicles and their parts, and industrial raw materials—are vulnerable to price hikes. “When the volume of imports increases and the per-unit cost rises, it strains our foreign exchange reserves,” Acharya explained. “In addition, the cost of repaying foreign debt, including interest and principal, also goes up.”
As of mid-March, Nepal’s foreign exchange reserves stood at USD 17.27 billion, enough to cover 14 months of imports of goods and services, according to Nepal Rastra Bank.
Ironically, while a stronger dollar raises import costs, it also boosts earnings from remittances and tourism. From mid-July to mid-March in the current fiscal year, Nepal received more than Rs 1051 billion in remittances, according to central bank data.
Meanwhile, most of the safe haven currencies have appreciated. For Friday, Nepal Rastra Bank set the selling rate for one Euro at Rs 153.95, up from 153.56 the previous day. The rate for one Swiss Franc rose from Rs 165.61 to Rs 179.67, while the value of the Japanese Yen dropped from Rs 9.60 for 10 Yen to Rs 9.55 for 10 Yen.
