KATHMANDU, Sept 23: Nepali currency shed a whopping Rs 1.65 (a drop of 2.13 percent) overnight vis-à-vis US dollar on Friday, recording sharpest fall in 29 months, as investors in India–against whose currency NRs is pegged–pulled out their money to invest in lucrative overseas assets.
Nepal Rastra Bank (NRB), country´s monetary authority, which adjusts the value of rupee depending on the movement of Indian currency vis-à-vis US dollar, set the price of greenback at Rs 78.91 for Friday. On Thursday, the
exchange rate was fixed at Rs 77.26.
Dollar was exchanged at Rs 79.75 in May 2009.
“Rupee fell mainly due to drop in the value of Indian currency against US dollar,” said NRB spokesperson Bhaskar Mani Gyawali. Although he did not elaborate further, officials keeping an eye on currency movement attributed the drop to latest rise in investors confidence over greenback, which recorded 7-month high during Friday´s trading, while euro fell on the back of debt crisis.
Because of this gain of USD against major rival currencies, investors have in recent days preferred to pull out their money from India to invest on lucrative assets abroad.
This change in investors´ psychology, meanwhile, has cost Nepali currency dearly. It has directly caused rupee fall by 3.55 percent (Rs 2.71) against a USD over this week. This can have a huge impact on general consumers as it has straight away jacked up the import rates.
The fallback of devaluation could hurt festive buyers. As the country prepares for celebrating Dashain, Tihar and Chhat, importers are rapidly placing orders and brining goods to make up for the swelling festive demands. “Sadly, for consumers, the devaluation has happened at such a crucial time,” Gyawali noted.
Nepalis had braved inflation of 9.6 percent last fiscal year. Although the central bank officials said inflation was moderating of late, the latest trend of currency movement could disfigure it again.