Rupee dips to Rs 97.73 a dollar

THE Nepali rupee has dipped to an all-time low against the US dollar, with the Nepal Rastra Bank (NRB) setting the reference exchange rate at Rs 97.73 per dollar for Thursday. The Nepali currency witnessed a single day fall of Rs 1.04 a dollar on Wednesday. The Nepali currency has been depreciating against the dollar for the last few months. Earlier, the domestic currency had reached at Rs 97.69 per dollar on July 8. The depreciation of the domestic currency against the dollar is due to downfall of the Indian currency (IC) against the greenback. As the Nepali currency is pegged with the IC, the rupee is affected when the IC falls against the dollar. The Indian rupee dropped by 73 paisa to 61.20 against the greenback on Wednesday. The continued downfall of the domestic currency against the dollar has already started affecting the Nepali economy. Goods imported from third countries and raw materials imported even from India against the dollar have become more expensive. Akhil Chapagain, a trader, said the traders have reduced imports and have now been opening only the letter of credit to comply with the commitment made earlier to the business parties. “The depreciation has also contributed to the price rise of around 23 percent over the period,” he said. “As a result, market demand has also dropped notably as inflation affected the purchasing capacity of the people.” Kripananda Jha, general manager of CG Electronics which has huge share in domestic electronics market, said the impact of the appreciating dollar would now be witnessed along with the beginning of new fiscal year. “We have now started billing of our products which shows a five percent rise in the last one month alone,” he said. The dealers are reluctant to raise the price due to growing competition in the market, he explained. “The current depreciation will mount pressure in the price further.” The NRB, on the other hand, said that the surging dollar in the last three months has had only a nominal impact in the economy. “As around 70 percent of the goods are imported from India, the effect was seen in only imports from third countries,” said NRB spokesperson Bhaskar Mani Gnawali. The appreciation of dollar will, however, lead to higher inflow of remittance and will contribute export earnings positively. Gnawali said there has been an increase in remittance inflow in the recent days because of the soaring dollar. “The impact is not seen instantly, but it affects the economy at micro level which can be obvious only in the long run,” he said.