KATHMANDU, Nov 19: Nepali rupee fell to over two-month low and hit Rs 88.55 per US dollar on Monday, as the greenback consistently gained value in India, with which currency the rupee is pegged, amid problems seen in the US fiscal front and euro zone debt crisis.
This made imports expensive thereby adding financial burden on general consumers, who were already braving inflation of 11.2 percent in mid-September.
Officials of Foreign Exchange Dealers´ Association of Nepal (FEDAN) attributed the dollar´s rise to weakening of Indian currency, which again is due to international reasons, such as fiscal problem seen in the US and debt crisis in euro zone. Those problems, according to experts, buoyed demand for the greenback in India, causing Indian currency and Nepali rupee to shed value.
Though rupee hit all time low of Rs 91.88 against a dollar on June 23, it had gradually recovered and stood at Rs 89.03 on September 14. On September 15, it suddenly recorded an overnight gain of Rs 1.20 against a dollar - thanks to India´s decision to allow foreign investment in some key sectors.
Rupee enjoyed consistent gain for the next three weeks as India recorded a strong inflow of dollar following its reforms. Data of Nepal Rastra Bank (NRB) shows Nepali rupee gained about Rs 5 against a dollar during the period and settled at Rs 82.99 per dollar on October 7.
But since then, problems seen in the US and the euro zone have consistently buoyed demand for dollar, causing rupee to drop values against dollar.
According to NRB, rupee has shed Rs 5.56 against a dollar since October 7. And officials say dollar´s rally could stay for the time being.
The drop recorded over the past few weeks, however, brought cheers to families of Nepalis working abroad as that increased the volume of their remittance receipts in local currency.
It also raised receipts of export earners in local currency. The devaluation of rupee, meanwhile, caused the government to burn more rupees to service foreign debt. But officials at the Ministry of Finance failed to precisely mention the extent of impact it had on the treasury owing to lack of clear assessment.