The US Dollar Reaches All-Time High: Implications for Nepal
The US dollar has reached an all-time high. According to Nepal Rastra Bank (NRB), today the selling rate of one US dollar has reached 133.44 rupees. Earlier on Bhadra 1, the price of one US dollar had reached 133.34 rupees.
Today, the buying rate of one US dollar is fixed at 132.84 rupees.
As the Indian currency weakens, the Nepalese rupee has fallen to the cheapest level as the dollar appreciates. There is a fixed exchange rate between the Nepali rupee and the Indian currency. 160 Nepalese rupees equal to 100 rupees. This is the reason why when the Indian currency weakens, the Nepali rupee also gets cheaper. One dollar is fixed at 83.13 Indian rupees.
In recent times, imports in India have been expanding. Reserve Bank of India (RBI) has predicted that the inflation rate will increase. An increase in imports for consumption leads to a decrease in foreign exchange reserves. As a result, the demand for dollars has increased and the mass has weakened, according to the analysis of the media. In this context, some foreign investors have started withdrawing their money and taking it back.
When the value of the dollar increases, the money sent by Nepalis working abroad increases the remittance income. According to the data of Nepal Rastra Bank till Bhadra, 11 trillion 12 billion 52 crore remittances have entered Nepal.
A rise in the dollar will provide relief to the export trade. But because the export of goods is limited, it is difficult for Nepal to take advantage of the exchange rate. Along with the income from the sale of goods and services, the income of the tourism sector will also improve. The income of exporters of Nepali goods including handicrafts will increase.
Since Nepal imports a large amount, the goods and services to be bought by paying foreign currency are expensive. Till May, 14 trillion 80 billion 98 crore rupees have been imported. As the imported goods will come in with expensive dollar, its pressure will be seen in the price increase.
Due to increasing petroleum and dollar price, Nepal will become more expensive. Even now, Nepal Oil Corporation has started increasing the price of petroleum products.
The increase in the value of the dollar has more losses than benefits for Nepal. As the economy is dependent on imports, the Nepali market is affected by the increase in the value of the dollar. By paying in dollars, the price of goods coming from abroad will be higher.
Motors, mobile phones, electronics, clothes and other goods coming from India and third countries are expensive. The price of cheap goods coming from China will also be affected. The value of the yuan is determined based on the rise and fall in the value of the dollar.
Bringing raw materials from abroad will increase the cost of the manufacturing industry. After the increase in the cost of manufactured goods, its effect starts to be seen in the price of consumer goods within a few days.
A rising dollar places an additional burden on the government in foreign debt and principal repayments. The government will also have to pay more money to the hydropower projects that have purchased energy in dollars. Dollar increase will also cause problems for those who go to study in foreign colleges, get medical treatment, and travel abroad as tourists.
