Moneychangers to be given commission on Indian currency

KATHMANDU:

Nepal Rastra Bank is offering money changers commission on exchange of Indian currency at its offices.

Moneychangers that bring Indian currency to be exchanged at Nepal Rastra Bank (NRB)’s offices will get Re 0.15 per IRs 100 — that is every Rs 160 will bring them an additional Re 0.15 as commission, the central bank said, issuing a circular today. The central bank charges an additional Re 0.15 per IRs 100 while selling it — that is while giving Indian currency against Nepali rupee. The Nepali rupee is at a fixed peg with the Indian currency at Rs 160 per IRs 100 since 1993.

The commission for the currency exchange is expected to rope in Indian currency to the central bank from moneychangers so that the central bank can get some relief from the ever present cash crunch. “The current provision will help bring Indian currency to the central bank as we will provide better price with additional premium at present,” pointed out an official at NRB. Facility is only available for moneychangers.

Though Indian currency in cash form has always been in short supply, the demand for cash had eased a bit in the last couple of months. Bordering towns had recorded a decline in demand for currency exchange last month following tightened security.

“We have information that moneychangers near border towns have a large amount of Indian currency in reserve due to the slump in demand, so the current provision will be instrumental in bringing in the Indian currency from them to NRB,” added the official at NRB’s Foreign Exchange Management Department.

The demand for Indian currency declined further due the closure of the border for the Constituent Assembly election in November, which helped reduce illegal trade. The excessive demand for Indian currency at border areas arise as traders need to pay for illegally imported goods but cannot approach banks.

The Indian central bank — Reserve Bank of India — provides IRs six billion in cash annually to Nepal Rastra Bank.

Source: THT