Kathmandu. The price of the US dollar has reached an all-time high in the Nepali market today. According to the exchange rate fixed by Nepal Rastra Bank, the selling rate of 1 US dollar has reached Rs 150.54. The continuous rise in the value of the dollar from around Rs 147 a month ago is likely to have a mixed but serious impact on the Nepali economy.
The main reason for the continuous increase in the value of the dollar for the last one month is the weakening of the Indian rupee.TAG_OPEN_p_60 Due to the stable exchange rate of the Nepali rupee with the Indian rupee, the Indian rupee weakens and the Nepali rupee automatically weakens. The strong US economy in global markets and rising tensions in the Middle East have attracted investors to the dollar.
Since Nepal is an import-dependent country, the cost of import of petroleum products, electronics, raw materials and food grains increases when the dollar becomes expensive.TAG_OPEN_p_59 This will increase the price in the market and make the kitchen expensive for the common people. Nepal has to pay its foreign debt in dollars. When the value of the dollar rises, the government’s obligation to pay principal and interest increases by billions of rupees.
On the other hand, a strong dollar makes it cheaper for tourists to visit Nepal, which can increase tourist arrivals.TAG_OPEN_p_58 Also, the goods exported from Nepal are cheaper for foreigners, so there may be some relief in the export trade. Apart from this, the family here will get more money due to the increase in the exchange rate of dollars sent by Nepalis living abroad. This will support the rural economy and consumption.
According to the latest report of the Nepal Rastra Bank, Nepal has foreign exchange reserves of about $ 22.76 billion.TAG_OPEN_p_57 This reserve is sufficient to sustain the import of goods and services for about 18 months, which is the strongest situation in Nepal’s history.
Major sources and contributions to Nepal’s dollar income:
| source | Annual Income (approximately) | GDP Contributions |
| Remittances | $12.6 billion | 25% – 30% |
| Tourism | $600 – 800 million | 2% – 4% |
| Export | $1.2 billion | 3% – 4% |
| Foreign Grants | $1 billion | 2% |
The ongoing attacks on Iran led by the US and Israel can cause a big blow to Nepal’s economy if the tensions in the Middle East and the Gulf region are prolonged. Around 41 percent of Nepal’s remittances come from the Gulf countries. If the war escalates, Nepali workers risk losing their jobs and security, which directly affects dollar reserves. If the supply of fuel and fertilizer from the Gulf region is disrupted, the agriculture and transport sectors in Nepal could be disrupted. Rising transport fares and insurance costs threaten to spiral out of control.
