Kathmandu, October 27 – The value of the US dollar hit a new record against the Nepali rupee, with the buying rate set at Rs 134.24 and the selling rate at Rs 134.84 by the Nepal Rastra Bank (NRB) on Sunday. This surge marks an all-time high, affecting both economic benefits and challenges for Nepal as the dollar continues to climb due to factors linked to India’s rising dollar demand.

Dollar Rise Driven by Indian Demand

Nepal’s currency is pegged to the Indian rupee, meaning fluctuations in India directly impact Nepal. Recently, India has increased its demand for dollars to strengthen its foreign reserves, leading to an increase in dollar rates across both countries. “The high dollar demand and low supply in India have influenced the rise in Nepal,” noted NRB officials.

Earlier this year, Western central banks like the Federal Reserve raised interest rates, pushing up global dollar value. Now, India’s dollar-reserve strategy has added further pressure, causing additional strain on both the Nepali and Indian currencies.

Economic Impact on Nepal

The dollar’s appreciation brings both gains and drawbacks for the Nepali economy. Key impacts include:

1. Higher Remittance and Tourism Income: The rising dollar means remittances will yield more rupees, potentially benefiting families reliant on foreign income. Additionally, tourism revenue will see a boost as foreign dollars are converted to a higher rupee value.
2. Costlier Imports and Debt Repayment: With the dollar’s higher value, imports—including essential goods like fuel and machinery—will become more expensive. Nepal, which imports goods worth approximately Rs 1.4 to 1.5 trillion annually, faces higher expenses in dollar-denominated payments. Additionally, foreign debt repayment obligations will now require more rupees.

Need for Economic Strengthening

Experts suggest that while the increased dollar value can benefit Nepal’s income from remittances and exports, it poses long-term challenges. A stronger Nepali currency would be more sustainable, reducing dependency on imports and lowering debt burdens. Experts argue that economic strengthening is essential to achieving currency stability and minimizing adverse effects on local markets.