Rupee falls to over 27-month low

Kathmandu, December 9

The Nepali currency has fallen to over a 27-month low, as the Indian rupee, with which the country’s currency is pegged, came under pressure in mid-day trade.

Nepali rupee will open for trading at 107.24 against the US dollar on Thursday, shows the reference rate of Nepal Rastra Bank (NRB), the central bank. This exchange rate is the lowest in over 27 months.

The last time the rupee had fallen to this level was on September 5, 2013, when the exchange rate stood at 107.83.

Nepali rupee’s rise and fall depends on the movement of the Indian currency because Nepali rupee is pegged to the Indian rupee at 1.6.

Today, Indian currency opened for trading at 66.83 per dollar, slightly higher than Tuesday’s close of 66.84. But the value of the Indian currency depreciated to 66.92 in mid-afternoon following heavy dollar demand — albeit recovery was made shortly and it closed at 66.83.

Since Nepal Rastra Bank fixes exchange rate for the next day based on mid-day exchange rate of Indian rupee vis-à-vis dollar, Nepali rupee will trade at over a 27-month low on Thursday.

The Indian rupee is currently under pressure because of signals that US Federal Reserve will raise benchmark interest rate for the first time since June 2006 during the meeting scheduled for December 15 to 16.

The decision made by the European Central Bank on Thursday to slash deposit rate to minus 0.30 per cent from minus 0.20 per cent has also exerted pressure on the Indian rupee.
Further, there are fears that foreign institutional investors may pull out of India — triggering capital flight and putting additional pressure on the Indian rupee — because of delay in endorsement of the Goods and Services Tax (GST) Bill, LiveMint reported.