The Nepali rupee this week hit an all-time low against the US dollar (1 USD equaled Rs 115.11 at the time of writing this report). This in turn fueled speculations on the future of the local currency, even as the trade deficit steadily mounted. The Nepal Oil Corporation has already announced a monthly loss of Rs 640 million partly as a result of a dearer dollar.
According to Nepal Rastra Bank, Nepal imported Rs 1.24 trillion worth of goods while exporting only Rs 81.19 billion worth in the last fiscal that ended mid-July. Pegged to the Indian rupee, the Nepali currency is depreciating in tandem with India’s. But while there has been much talk of the doom and gloom from the rapid devaluation of our currency, the upsides to Nepal of a dearer dollar have been comparably ignored.
“The increase in dollar rate at the start of the tourist season is good for us,” says Ganesh Bahadur Thapa, the owner of the 2-star Hotel Snowland in Lakeside, Pokhara. “Our rooms are priced in dollar and what little we purchase for our kitchen we can get locally.” Thapa explains that with the US dollar strong, tourism could be one industry that could help stabilize the economy.
“The pricier dollar is good for us too,” says the owner of a money exchange in Kathmandu. “People are enthusiastically handing us dollars in return for more and more rupees. The higher the volume of the exchange, the higher the commissions for us.”
Albeit small in size compared to other businesses, the foreign IT-based companies that work from Nepal have been flourishing as well. “I make an average of $500 a month working as a copywriter for international clients. Of late my dollar income has increased,” says Nirman Pradhan, an IT worker in Kathmandu. Pradhan, like most IT professionals in Nepal, uses web-based platforms like Freelancer, Guru, Peopleperhour, Upwork to find international clients. They get paid in dollars that are deposited into their Nepali bank accounts.
Dinesh Karki, who runs an offshore IT company based in Nepal, believes the country’s trade imbalance can be checked by the service sector that earns in foreign currencies. “When we talk of exports in Nepal, why do we only mean export of goods? After all, many advanced economies have grown largely on the back of their service industries,” Karki says.
He suggests one way out for Nepal could be a massive upgrade of the service industries. “If only the government could see the importance of developing infrastructure and creating a conducive environment for IT professionals, we have enough talent in Nepal to bring plenty of foreign income,” Karki says. “But at the moment the government is far from helpful.”
IT professionals in Nepal have of late been complaining of various restrictions in their work. The government has for instance banned trading in cryptocurrencies, a lucrative earning opportunity for IT professionals. The NRB also has strict regulations on international credit cards for Nepalis, restricting any form of online payment.
“How do we run our business when we cannot even make online purchases?” Karki asks. “It would be a lot easier for us if the government stopped treating IT professionals as money launderers
