Today, the selling rate of 1 US dollar has reached an all-time high of NPR 136.50, with the buying rate at NPR 135.90.
On Friday, the selling rate for 1 dollar was a record NPR 136.42. Over the weekend, the rate slightly dropped, reaching NPR 136.33 on Monday. However, the dollar has been steadily rising in recent weeks.
The Nepali rupee has weakened due to the declining value of the Indian rupee, to which it is pegged. Increased imports have reduced foreign currency reserves, leading to higher demand for dollars and a weaker Indian rupee. Some foreign investors have also reportedly withdrawn their funds.
Impact of the Rising Dollar
Benefits:
- Increased Remittance: Nepalese working abroad send more money home, which boosts remittance income.
- Support for Exports: Export businesses benefit from a stronger dollar. This includes sectors like handicrafts and tourism, which see increased earnings.
Challenges:
- Costlier Imports: Nepal, which relies heavily on imports, will face higher prices for goods and services purchased in dollars. Items like petroleum, electronics, clothing, and even raw materials will become more expensive.
- Inflation Pressure: Higher import costs will lead to price increases in consumer goods.
- Rising Living Costs: Increased petroleum prices and other dollar-driven costs will make life more expensive in Nepal.
Effects on Industries and Consumers:
- Industries that import raw materials will see production costs rise, which will eventually affect retail prices.
- Imported goods from India, third countries, and China, including vehicles, mobile phones, and electronics, will become more expensive.
- Students studying abroad, those seeking medical treatment overseas, and travelers will face financial strain.
The government will need to pay more for foreign loans and hydropower projects that purchase energy in dollars. This adds pressure to the economy.
While a rising dollar brings some benefits, the overall impact is negative for an import-dependent economy like Nepal.