NPR hits record low against USD; Dashin will turn out to be more expensive than expected

Nepali Rupee is at record low against US Dollar. NRB posted an exchange rate of Rs.117.65 against one Dollar on Thursday. This is the lowest NPR has ever went against US Dollar. Since, Nepal follows fixed exchange rate of Rs.1.6015 against one INR, the weakening of INR in the forex market has resulted in all-time low of NPR as well. INR currently stands at Rs.73.34 against one Dollar which is the lowest INR has ever went.

The effect of expensive dollar will be felt throughout Nepal and Dashin will become more expensive in almost all aspects. NPR was at Rs.106.38 against one dollar at the beginning of year 2075 and in a span of 5 months NPR has fallen almost by 11 rupees against dollar. This comes after American President, Donald Trump had imposed economic barriers and tariffs making the American economy stronger and in turn Dollar more expensive. The effect of expensive Dollar is being felt by all nations worldwide. Moreover, the value of petroleum products is going up in the international market due to this.

Nepal being an import based economy, will face a huge problem in terms of inflation of price of goods if this continues. The imports from India and other countries that include almost all basic goods and services will become dearer. Along with basic goods, industries that import raw materials against dollar and produce goods in Nepal will have to spend more on raw materials due to which the end consumer will be burdened will increased price of goods. People planning their holidays and vacations in different countries will end up paying more for the same goods and services. But people travelling to Nepal for holidays will end up getting more for the same value. Nepal’s debt from other countries, which is already heavy, will result in becoming heavier.

Coming to the remittance sector, the increase in value received from abroad will be somewhat off-set by the increased prices in goods and services here. Nepalese people will face a lot of burden in terms of increase in prices of goods and services in the face of Dashin due to which Dashin may seem a little less auspicious this year.