-ANI): The Nepali rupee plummeted to an all-time low against the U.S. dollar on Thursday as the central bank fixed the exchange rate at 90.58 rupees a dollar for Friday, breaking the previous record of 90.17 rupees a dollar on May 31.
The devaluation of the Indian currency (with which the Nepali currency is pegged) against the U.S. dollar is to blame for the weakening of the Nepali rupee. As the domestic currency is pegged with the Indian rupee, the exchange rate solely depends on the strength of the Indian currency, said the central bank Nepal Rastra Bank (NRB).
The NRB spokesman Bhaskar Mani Gyawali said the weakening of the Nepali rupee was due to the devaluation of Indian currency against dollar. High demand for the U.S. dollar from the Indian oil importers pushed dollar value up, he said.
In recent days, there has been a significant rise in price of petroleum products in the southern neighbor. "Besides, it could also be the effect of the ongoing eurozone crisis," said Gyawali.
The slump in the value of domestic currency might create some hope for exporters as they could register more export earnings. However, the cost of the manufacturing of products which mainly depend on the imported raw material will rise.
The appreciation of dollar is also expected to raise the cost of debt servicing by the government. The government is required to pay back loans to foreign countries and other donors in dollar terms. Strong dollar is also expected to increase the cost of large projects, a majority of which depends on imported technology goods. (Xinhua-ANI)