Nepal’s consumers are presently beset by economic problems like the low value of the Nepalese rupee against the US dollar and inflation. This development comes as many nations grapple with similar economic issues like soaring inflation and national currency devaluation.
We are interested in following the foreign exchange-related events in various countries, which we believe impact our followers worldwide.
We think this latest news about the Nepalese rupee is useful reading for our supporters who may be holding units of this foreign currency, so we are sharing it with them.
The Nepalese rupee plunged to an all-time low versus the US dollar during the onset of March 2022. The US dollar-Nepalese rupee exchange rate hit 123.44 Nepalese rupees per US$1.
Subsequently, Nepal’s central bank, the Nepal Rastra Bank or NRB, fixed the exchange rate at 123.44 Nepalese rupees per dollar. At the time of writing, US$1 is equivalent to 124 Nepalese rupees, per the foreign exchange rate data posted on Xe.com.
The greenback appreciated at its highest level earlier in April 2020 against the Nepali currency at 121.69 Nepalese rupees a dollar. Then, the official currency of the United States nosedived to as low as 116.15 Nepalese rupees per dollar in March last year.
It later took an upward movement, per the NRB’s records. Besides the Nepalese rupee’s devaluation versus the US dollar, inflation in Nepal has been on ascending order lately due to rising energy, metal, and food costs attributed to Russia’s invasion of Ukraine.
Consumer inflation in the landlocked country in South Asia reached a 67-month high at 7.14 percent in mid-March this year. Another factor contributing to rising inflation in Nepal is election spending.
Local elections in the country are slated this Friday, May 13, in a single phase across the nation. This important political happening fuels inflation fears as banks have reported large cash withdrawals these days ahead of the polls.
Cash withdrawals have reportedly increased, which is common during the election period, per NRB officials. Additionally, political candidates need to spend more funds for poll campaigns, and the Nepali Government has to mobilize its workers for the elections.
Commercial bank NMB Bank Nepal’s staff cited that they had witnessed increased cash withdrawals in the past two weeks in a manner typically seen ahead of major festivals. Economist Keshav Acharya pointed out that election spending fuels the fire amid an already high inflationary pressure in Nepal.
He relayed that demands for consumer goods during elections, including food items, increase because of poll campaigns that push their prices upwards. We think the economic issues of the Nepalese rupee devaluation versus the US dollar and soaring inflation are a double whammy for Nepal.
We can just imagine how challenging it is for the Nepali people to cope. We recommend the Nepalese Government and its central bank, the Nepal Rastra Bank, intervene to help the masses as they navigate these economically hard times.