Dollar Rate Reaches All-Time High in Nepal 

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Dollar Rate Reaches All-Time High in Nepal 

March 9: The US dollar’s rate has been rising steadily to reach an all-time high in Nepal. Prior to this, the highest rate of US dollar in Nepal (selling price) was Rs 123.28 on April 17, 2020. On March 8, 2022, the selling price of US dollar surpassed that mark to reach Rs 123.44. According to Nepal Rastra Bank, this is the all-time high price of US dollar. 

A large proportion of Nepal’s foreign trade is with India. As Nepal’s currency is pegged to India, it has a direct effect on Nepali rupee as the dollar depreciates in India. 

As the dollar’s rate increases, exports, tourism revenue and remittances increase. However, exports of goods from Nepal are low and the number of tourists has been declining in Nepal for the last two years due to Covid-19. Nepalis, who have gone for foreign employment are also sending less remittances recently. Former executive director of Nepal Rastra Bank Nara Bahadur Thapa said that this will create pressure on foreign exchange reserves. 

According to Thapa, the budget deficit will increase due to the rise in the value of the dollar. “From Nepal's perspective, an increase in the rate of dollar will have a direct impact on the economy. This will increase the budget deficit as the interest on loans paid by the state will also increase,” said Thapa. As the dollar increases, the balance of payments and trade deficit also increase. According to Thapa, the cheaper the dollar, the better it will be for development works and to buy imported goods. 

The raw materials used in Nepal's exports have to be imported in dollars from abroad. It is certain that the price of raw materials imported from abroad will increase now. However, the increase in value of dollar does not necessarily increase the price of imported goods all of a sudden.

Thapa said that the price hike would not have any immediate effect as the traders would now sell the goods they had bought before the rise in the rate of dollar. 

 

 

 

 

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