Value of Nepalese Currency Rises after US Removes India from its ‘Currency Watchlist’

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Value of Nepalese Currency Rises after US Removes India from its ‘Currency Watchlist’

November 14: The value of Nepalese currency has strengthened along with the Indian rupee after the US Department of Treasury removed the Indian Currency from its ‘Currency Watchlist’. Analysts say that this trend will continue.

There is a fixed exchange rate between the Indian and Nepalese currencies. The value of the US dollar in Nepal is determined based on the value of the Indian currency. For this reason, the Nepalese rupee is weak when the INR is weak and vice versa. The exchange rate of the USD in the Nepalese market has dropped from Rs 133 to Rs 129 per dollar after India was removed from the watchlist.

The Indian rupee has strengthened by 2 per cent against the US dollar over the past week. On Friday, the value of Indian currency rose by 1.23 per cent in a single day due to the prospect of the Federal Reserve, the central bank of the US, increasing the interest rate a little more than expected. As of Friday, one dollar was equivalent to INR 80.81. The effect of the removal of INR from the watchlist is yet to be seen as trading in the international currency market is closed on Saturday and Sunday.

Nepal Rastra Bank had fixed the exchange rate for USD 1 at Rs 131.2 on Friday and at Rs 129. 58 for Saturday and Sunday.

Economist Nar Bahadur Thapa said that the removal of the Indian currency from the US currency watchlist has strengthened the Indian currency, and its impact has been felt on the Nepali currency. A weak USD has a positive effect on Nepal's trade deficit and inflation. The consumers who are facing price hike due to the recent increase in the value of the US dollar will get some relief.

Thapa said that there will be a loss in income form remittance though. As remittances are calculated based on the value of US dollars, more money is received when the dollar is expensive and less money is received when the dollar is cheap.

After two years, the US has removed India from the list of countries that manipulate the currency market. The US has also removed Italy, Mexico, Thailand and Vietnam from the list. The United States keeps its trade partners in this list based on the practices of any country in the currency market and the overall monetary policy.

 

 

 

 

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