About nepali currency

KATHMANDU, May 17 - There is a reason to smile for over a million remittance earning families, as the persistent fall of the Nepali rupee against the dollar has raised the volume of money that they get from their dear ones working overseas.
On Friday, the rupee's loss hit a 13-month low with the greenback's strength against the Indian unit gaining momentum.

The loss in rupees also makes Nepali goods cheaper in the international market and supports export.

However, it causes the price of imported goods to go up, puts further strains on cash-strapped Nepal Oil Corporation (NOC) to raise prices of petroleum products and expands the extent of public debt.

Monetary analysts said India's rupee is bracing a downturn on concerns that the near-record oil prices will boost India's import bill, widening the trade and current-account deficits. This has had a direct impact on the Nepali currency.

Nepal Rastra Bank (NRB) has set the trading value of rupee at Rs 68.80 a dollar for Saturday. It was Rs 68.33 at today's trading. The rupee has lost almost 8 percent since January 2008.

“The rupee's persistent weakness is solely due to the Indian factor,” said Krishna Bahadur Manandhar, acting governor of the NRB. He told the Post that the rise is on a correction course, as the rupee had earlier gained substantially.

He said it would not have any substantial impact on the present state of the economy.

The Nepali currency versus the dollar was rising together with the Indian rupee, which was becoming one of the best performing Asian units in 2007. However, the Indian currency has fallen more than 8 percent in 2008 and is the worst performing currency after the Korean Won and the Pakistani rupee.

Analysts said there is a strong chance of further fall of the Nepali rupee because of the Indian currency.

Morgan Stanley predicted that the Indian rupee may fall by 5-7 percent against the US dollar by the end of 2008, dragged by a slew of factors such as a widening trade deficit, and soaring oil and commodity prices.