Nepal seeks to regulate money withdrawals in India

Nepal seeks to regulate money withdrawals in India
Sify.com, 22-Jun-02

Faced with a growing shortage of Indian currency, Nepal's apex bank has introduced a new regulation to govern the withdrawal of money from Indian banks.

From this week, Nepalis or people living in Nepal who have accounts with Nepali banks can withdraw up to Rs.200,000 per month in India using automated teller machines (ATM).

Earlier, they could withdraw only Rs.25,000 per visit to India.

'We introduced the regulation from June 18 to ease the shortage of Indian currency in Nepal and to facilitate things,' said Gopal Prasad Kafle, spokesman at Nepal Rastra Bank, the regulating authority.

As per the new regulation, an ATM user can withdraw a maximum of Rs.25,000 at a time or Rs.200,000 within a month.

'However, if the user submits documents with his bank in Nepal to show a valid reason as to why he needs the money - for medical treatment, education or business - then he can withdraw as much as he wants, depending on the discretion of his bank,' Kafle told IANS.

Two Nepal banks are joint ventures with Indian banks. Nepal SBI, which is a joint venture of the State Bank of India, and Everest Bank Ltd, a JV of Punjab National Bank, enable their account holders to use their ATM cards and withdraw money from the partner banks in India.

Standard Chartered Bank account holders can use their ATM cards directly while many other Nepali banks have relations, direct or indirect, with other Indian banks for the benefit of their ATM card holders.

A ballooning trade deficit with India, Nepal's biggest trading partner, has caused a dearth of Indian currency in Nepal.

On the eve of trips to India, bona fide travellers find it difficult to acquire Indian currency from their banks and there are growing allegations that unauthorised money changers have been charging exorbitant commission.

Money changers at Indian airports, who used to accept Nepali currency, have stopped doing so nearly five years ago.

The NRB regulation is also intended to stop the flight of capital from Nepal.

As per Nepal's laws, Nepalis can't invest outside Nepal. However, the law is flouted with impunity by thousands who have investments in India, often under the names of relatives or friends.

Nepal considers currency devaluation in medium term

Nepal considers currency devaluation in medium term
Financial Times, 24-May-2010
By Neil Fullick

Nepal is considering devaluing its currency because a decades-old peg with the Indian rupee is posing problems for its monetary policy and competitiveness, the central bank governor was quoted as saying.

Yuva Raj Khatiwada, the newly appointed governor, told the Financial Times in a report published on Monday that Nepal needed to reconsider the currency peg "in the medium term" because of the disparity between India's fast growing economy and that of its landlocked neighbour.

The peg holds the exchange rate at 1.6 Nepali rupees per one Indian rupee.

"We have been overly stressed to maintain the peg," Khatiwada said, noting that India's economy was growing at twice the rate of Nepal's economy.

The governor said that India's rupee was appreciating because of the country's economic strength and capital flows.

"Our currency is strengthening just because we have a peg to Indian currency," the FT quoted the governor as saying.

He said Nepal had no choice but to keep the peg in place in the short term to maintain price stability. He feared rampant speculation if Nepal's currency, which is fully convertible with the Indian rupee, was allowed to float, the FT said.

At least 60 percent of Nepal's trade is with India, which is also a big source of worker remittances for Nepal.

Nepali rupee slips to record low

Nepali rupee slips to record low
eKantipur, 22-Oct-08

Amid huge capital outflows by foreign funds in India, the Nepali rupee has plunged to a historic low against the greenback to Rs.79.30 on Thursday. The rupee's previous low against the US dollar was in August 2002 when it dropped to Rs.78.60.

Nepal Rastra Bank (NRB), the country's monetary authority, has fixed a selling rate of Rs.79.30 for a US dollar for Thursday's trading. NRB's selling rate for Wednesday's trading was Rs.78.94, The Nepali rupee, which is pegged with the Indian currency, has already depreciated by over 24 percent this year. A rupee was traded at Rs.63.85 on Jan. 1.

According to the online edition of The Economic Times, the fall of the Indian rupee against the dollar was due to an increased demand for the dollar by importers and capital outflow of foreign funds. At the Interbank Foreign Exchange (Forex) market, the local unit, which remained steady at 49.00 on Tuesday, fell by 25 Indian paise to 49.25 against the greenback Wednesday.

The depreciation in the Nepali rupee, meanwhile, is good news for the country's export sector, which has been going through a rough patch in recent years. However, it would also make imported goods and raw materials more expensive, thereby pushing the inflation further up. More importantly, the depreciation of the Nepali rupee will increase the country's foreign debt repayment liabilities, which will put pressure on the government to manage additional resources this year.

Gold down Rs. 515

The volatile international market has brought down gold prices in Nepal pushing it down Rs. 515 per 10 grams on Wednesday.

According to the Gold and Silver Dealers Association (GSDA), prices of the precious yellow metal went down to Rs. 20,190 per 10 grams on Wednesday from Rs. 20,705 a day earlier. The price was Rs. 20,360 per 10 gram Sunday.

The price of gold in international bullion market dipped to US$759 per ounce (31.11 grams) from US$797 per ounce. However, the silver price rose marginally to Rs. 302 per 10 gram on Wednesday from Rs. 300.

GSDA President Tej Ratna Shakya attributed the fluctuation to the current global financial meltdown.

Rs 500 note without King's picture circulated

Rs 500 note without King's picture circulated
Nepalnews.com, 27-Sep-2007

The central bank has decided to circulate from Thursday the Rs 500 denomination note without the picture of the King.

Instead of the King's photo, the new note will have the picture of Mt. Everest. The mark of Crown has been replaced by a picture of rhododendron flower.

This is the first currency note that will come into circulation without the King's photo. Earlier, the central bank had issued coins without the King's name.

Currency notes had come into circulation in Nepal since last six decades. And in all of them, King's photo used to be placed prominently.

However, following the April 2006 movement and subsequent clipping of all kinds of authorities of the King, the Nepal Rastra Bank had decided to remove his picture also from the currency notes.

The NRB decided to bring the new note into circulation on the eve of Dashain festival. nepalnews.com sd Sep 27 07

Rupee scales to nine-year high

eKantipur.com, 24-Sep-2007
BY KRISHNA REGMI

The rupee rose to a nine-year high against the US dollar Monday with the steady fall of the greenback against the Indian rupee-- to which the Nepali currency is pegged.

While some economists said that the strong rupee has hurt exports, and reduced remittance value, industrialists argued that for a country like Nepal, which has a low export base and an import-dependent economy, the rising rupee is beneficial.

The partially convertible rupee ended at Rs 63.95 a dollar today-- its highest since 1998. Currency analysts said the Indian rupee has appreciated steadily against the dollar after sharp cuts in US rates last week revived strong foreign fund interest in the record-breaking Indian stock market.

According to an official at Nepal Rastra Bank (NRB), the Indian rupee is Asia's best performing currency, rising 11 percent since 2006-end. The dollar has dropped against major global currencies, weighed down by expectations of further US interest rate cuts which are limiting the currency's appeal to global investors.

Dr Ragahb Dhoj Pant, an economist told the Post that the decline in the dollar causes remittances to go down, and this is a very serious challenge for a remittance-dependent economy like Nepal’s as it lessens the purchasing power of the people.

"Pegging of the Nepali currency vis-à-vis the Indian unit for long--- at a rate which is unjustifiable-- is just piling up problems," he said. "The Indian economy's performance is several times better than Nepal's. This necessities review in our pegging system."

Acting Governor of the NRB, Krishna Bahadur Manandhar said the pros and cons of the rise and fall of the rupees seem virtually equal. "The country benefits in imports and outstanding foreign loans, and debt servicing costs fall," he said.

"However, the dollar's decline diminished the spending by tourists in Nepal. It also threatens to make exports more expensive, and therefore less competitive."

The total foreign debt decreased to Rs 213 billion by the end of the last fiscal year, from Rs 233 billion a year earlier, due mainly to a drop in the American currency.

Rajendra Khetan, president of Young Entrepreneurs' Council said if overall impact is analyzed, it is better for the economy to have a strong rupee. "It makes imports cheaper and does not allow inflation to reach a very high trajectory," he said.