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Theoretically, devaluation of currency is beneficial for exports, but in Nepal’s case that theory cannot apply as the country is heavily dependent on imports to meet consumer demand as well as for industrial raw material. Nepal exported merchandise worth Rs 69.93 billion during eleven months of 2012-13 while it imported goods worth Rs 508.60 billion, according to Current Macroeconomic Situation of Nepal released by Nepal Rastra Bank (NRB). </div>
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<span style="font-size: 12px;">The sharp decline in the value of the Nepali rupee in recent days has led to a clamour for the government to do something. This time, Nepal’s current currency depreciation has been created not due to Nepal’s own reason but due to pegged exchange rate with Indian currency. So, it is high time that the government dares to decide to discontinue pegged exchange rate with Indian currency. </span></div>
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Though the continuous fall of the value of rupee has raised serious concern in India itself and the Indian government may do something to control the value of Indian rupee, Nepal should not just wait India’s action. It should do something on its own, if it is following an independent monetary policy. Otherwise, it may do better by declaring the Indian repee as its legal tender. </div>
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The government and business community have had very little discourse about the problem and possible way out to control rupee depreciation. </div>
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Countries with their currency pegged with another country’s currency are normally known to have weak capital markets and financial regulating mechanisms. In such a scenario, the peg helps create stability in the economy. Citing these very reasons, policymakers, politicians and even business community in Nepal have always favoured to have the pegged exchange rate with Indian Currency. </div>
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<div>
</div>
<div>
Theoretically, devaluation of currency is beneficial for exports, but in Nepal’s case that theory cannot apply as the country is heavily dependent on imports to meet consumer demand as well as for industrial raw material. Nepal exported merchandise worth Rs 69.93 billion during eleven months of 2012-13 while it imported goods worth Rs 508.60 billion, according to Current Macroeconomic Situation of Nepal released by Nepal Rastra Bank (NRB). </div>
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The data clearly shows that Nepal has huge trade deficit and depreciation of rupees will have much more adverse impact on Nepali economy than would be the case in a country with relatively better trade balance. </div>
<div>
</div>
<div>
The pegging regime has both advantages and disadvantages. It helps to keep the fragile economy stable. But one never knows the real economic scenario of the country under such fixed exchange system. The Mundell-Fleming model, best known for its anti-pegged exchange rate philosophy, says that fixed exchange rate system restricts the effectiveness of having an independent monetary policy to achieve macroeconomic stability. </div>
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Though the continuous fall of the value of rupee has raised serious concern in India itself and the Indian government may do something to control the value of Indian rupee, Nepal should not just wait India’s action. It should do something on its own, if it is following an independent monetary policy. Otherwise, it may do better by declaring the Indian repee as its legal tender. </div>
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The government and business community have had very little discourse about the problem and possible way out to control rupee depreciation. </div>
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Theoretically, devaluation of currency is beneficial for exports, but in Nepal’s case that theory cannot apply as the country is heavily dependent on imports to meet consumer demand as well as for industrial raw material. Nepal exported merchandise worth Rs 69.93 billion during eleven months of 2012-13 while it imported goods worth Rs 508.60 billion, according to Current Macroeconomic Situation of Nepal released by Nepal Rastra Bank (NRB). </div>
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<span style="font-size: 12px;">The sharp decline in the value of the Nepali rupee in recent days has led to a clamour for the government to do something. This time, Nepal’s current currency depreciation has been created not due to Nepal’s own reason but due to pegged exchange rate with Indian currency. So, it is high time that the government dares to decide to discontinue pegged exchange rate with Indian currency. </span></div>
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Though the continuous fall of the value of rupee has raised serious concern in India itself and the Indian government may do something to control the value of Indian rupee, Nepal should not just wait India’s action. It should do something on its own, if it is following an independent monetary policy. Otherwise, it may do better by declaring the Indian repee as its legal tender. </div>
<div>
</div>
<div>
The government and business community have had very little discourse about the problem and possible way out to control rupee depreciation. </div>
<div>
</div>
<div>
Countries with their currency pegged with another country’s currency are normally known to have weak capital markets and financial regulating mechanisms. In such a scenario, the peg helps create stability in the economy. Citing these very reasons, policymakers, politicians and even business community in Nepal have always favoured to have the pegged exchange rate with Indian Currency. </div>
<div>
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<div>
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<div>
</div>
<div>
Theoretically, devaluation of currency is beneficial for exports, but in Nepal’s case that theory cannot apply as the country is heavily dependent on imports to meet consumer demand as well as for industrial raw material. Nepal exported merchandise worth Rs 69.93 billion during eleven months of 2012-13 while it imported goods worth Rs 508.60 billion, according to Current Macroeconomic Situation of Nepal released by Nepal Rastra Bank (NRB). </div>
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<div>
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Though the continuous fall of the value of rupee has raised serious concern in India itself and the Indian government may do something to control the value of Indian rupee, Nepal should not just wait India’s action. It should do something on its own, if it is following an independent monetary policy. Otherwise, it may do better by declaring the Indian repee as its legal tender. </div>
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Countries with their currency pegged with another country’s currency are normally known to have weak capital markets and financial regulating mechanisms. In such a scenario, the peg helps create stability in the economy. Citing these very reasons, policymakers, politicians and even business community in Nepal have always favoured to have the pegged exchange rate with Indian Currency. </div>
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<div>
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Theoretically, devaluation of currency is beneficial for exports, but in Nepal’s case that theory cannot apply as the country is heavily dependent on imports to meet consumer demand as well as for industrial raw material. Nepal exported merchandise worth Rs 69.93 billion during eleven months of 2012-13 while it imported goods worth Rs 508.60 billion, according to Current Macroeconomic Situation of Nepal released by Nepal Rastra Bank (NRB). </div>
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The pegging regime has both advantages and disadvantages. It helps to keep the fragile economy stable. But one never knows the real economic scenario of the country under such fixed exchange system. The Mundell-Fleming model, best known for its anti-pegged exchange rate philosophy, says that fixed exchange rate system restricts the effectiveness of having an independent monetary policy to achieve macroeconomic stability. </div>
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The sharp decline in the value of the Nepali rupee in recent days has led to a clamour for the government to do something. This time, Nepal’s current currency depreciation has been created not due to Nepal’s own reason but due to pegged exchange rate with Indian currency. So, it is high time that the government dares to decide to discontinue pegged exchange rate with Indian currency.
Though the continuous fall of the value of rupee has raised serious concern in India itself and the Indian government may do something to control the value of Indian rupee, Nepal should not just wait India’s action. It should do something on its own, if it is following an independent monetary policy. Otherwise, it may do better by declaring the Indian repee as its legal tender.
The government and business community have had very little discourse about the problem and possible way out to control rupee depreciation.
Countries with their currency pegged with another country’s currency are normally known to have weak capital markets and financial regulating mechanisms. In such a scenario, the peg helps create stability in the economy. Citing these very reasons, policymakers, politicians and even business community in Nepal have always favoured to have the pegged exchange rate with Indian Currency.
But the recent massive depreciation of Indian currency has thrown all these logics out of the window and the situation calls for a serious debate on whether Nepali rupee should maintain the peg system.
Theoretically, devaluation of currency is beneficial for exports, but in Nepal’s case that theory cannot apply as the country is heavily dependent on imports to meet consumer demand as well as for industrial raw material. Nepal exported merchandise worth Rs 69.93 billion during eleven months of 2012-13 while it imported goods worth Rs 508.60 billion, according to Current Macroeconomic Situation of Nepal released by Nepal Rastra Bank (NRB).
The data clearly shows that Nepal has huge trade deficit and depreciation of rupees will have much more adverse impact on Nepali economy than would be the case in a country with relatively better trade balance.
The pegging regime has both advantages and disadvantages. It helps to keep the fragile economy stable. But one never knows the real economic scenario of the country under such fixed exchange system. The Mundell-Fleming model, best known for its anti-pegged exchange rate philosophy, says that fixed exchange rate system restricts the effectiveness of having an independent monetary policy to achieve macroeconomic stability.
In light of the Indian currency crisis, Nepal is desperately looking for best option to keep Nepali rupee stable. It is difficult to find a good solution to it as long as the pegged exchange rate system is not done away.
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Though the continuous fall of the value of rupee has raised serious concern in India itself and the Indian government may do something to control the value of Indian rupee, Nepal should not just wait India’s action. It should do something on its own, if it is following an independent monetary policy. Otherwise, it may do better by declaring the Indian repee as its legal tender. </div>
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Theoretically, devaluation of currency is beneficial for exports, but in Nepal’s case that theory cannot apply as the country is heavily dependent on imports to meet consumer demand as well as for industrial raw material. Nepal exported merchandise worth Rs 69.93 billion during eleven months of 2012-13 while it imported goods worth Rs 508.60 billion, according to Current Macroeconomic Situation of Nepal released by Nepal Rastra Bank (NRB). </div>
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The pegging regime has both advantages and disadvantages. It helps to keep the fragile economy stable. But one never knows the real economic scenario of the country under such fixed exchange system. The Mundell-Fleming model, best known for its anti-pegged exchange rate philosophy, says that fixed exchange rate system restricts the effectiveness of having an independent monetary policy to achieve macroeconomic stability. </div>
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<span style="font-size: 12px;">The sharp decline in the value of the Nepali rupee in recent days has led to a clamour for the government to do something. This time, Nepal’s current currency depreciation has been created not due to Nepal’s own reason but due to pegged exchange rate with Indian currency. So, it is high time that the government dares to decide to discontinue pegged exchange rate with Indian currency. </span></div>
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Though the continuous fall of the value of rupee has raised serious concern in India itself and the Indian government may do something to control the value of Indian rupee, Nepal should not just wait India’s action. It should do something on its own, if it is following an independent monetary policy. Otherwise, it may do better by declaring the Indian repee as its legal tender. </div>
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<div>
The government and business community have had very little discourse about the problem and possible way out to control rupee depreciation. </div>
<div>
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Countries with their currency pegged with another country’s currency are normally known to have weak capital markets and financial regulating mechanisms. In such a scenario, the peg helps create stability in the economy. Citing these very reasons, policymakers, politicians and even business community in Nepal have always favoured to have the pegged exchange rate with Indian Currency. </div>
<div>
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<div>
But the recent massive depreciation of Indian currency has thrown all these logics out of the window and the situation calls for a serious debate on whether Nepali rupee should maintain the peg system. </div>
<div>
</div>
<div>
Theoretically, devaluation of currency is beneficial for exports, but in Nepal’s case that theory cannot apply as the country is heavily dependent on imports to meet consumer demand as well as for industrial raw material. Nepal exported merchandise worth Rs 69.93 billion during eleven months of 2012-13 while it imported goods worth Rs 508.60 billion, according to Current Macroeconomic Situation of Nepal released by Nepal Rastra Bank (NRB). </div>
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The data clearly shows that Nepal has huge trade deficit and depreciation of rupees will have much more adverse impact on Nepali economy than would be the case in a country with relatively better trade balance. </div>
<div>
</div>
<div>
The pegging regime has both advantages and disadvantages. It helps to keep the fragile economy stable. But one never knows the real economic scenario of the country under such fixed exchange system. The Mundell-Fleming model, best known for its anti-pegged exchange rate philosophy, says that fixed exchange rate system restricts the effectiveness of having an independent monetary policy to achieve macroeconomic stability. </div>
<div>
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<div>
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Theoretically, devaluation of currency is beneficial for exports, but in Nepal’s case that theory cannot apply as the country is heavily dependent on imports to meet consumer demand as well as for industrial raw material. Nepal exported merchandise worth Rs 69.93 billion during eleven months of 2012-13 while it imported goods worth Rs 508.60 billion, according to Current Macroeconomic Situation of Nepal released by Nepal Rastra Bank (NRB). </div>
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Though the continuous fall of the value of rupee has raised serious concern in India itself and the Indian government may do something to control the value of Indian rupee, Nepal should not just wait India’s action. It should do something on its own, if it is following an independent monetary policy. Otherwise, it may do better by declaring the Indian repee as its legal tender. </div>
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<div>
The government and business community have had very little discourse about the problem and possible way out to control rupee depreciation. </div>
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Countries with their currency pegged with another country’s currency are normally known to have weak capital markets and financial regulating mechanisms. In such a scenario, the peg helps create stability in the economy. Citing these very reasons, policymakers, politicians and even business community in Nepal have always favoured to have the pegged exchange rate with Indian Currency. </div>
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<div>
</div>
<div>
Theoretically, devaluation of currency is beneficial for exports, but in Nepal’s case that theory cannot apply as the country is heavily dependent on imports to meet consumer demand as well as for industrial raw material. Nepal exported merchandise worth Rs 69.93 billion during eleven months of 2012-13 while it imported goods worth Rs 508.60 billion, according to Current Macroeconomic Situation of Nepal released by Nepal Rastra Bank (NRB). </div>
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<div>
</div>
<div>
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Theoretically, devaluation of currency is beneficial for exports, but in Nepal’s case that theory cannot apply as the country is heavily dependent on imports to meet consumer demand as well as for industrial raw material. Nepal exported merchandise worth Rs 69.93 billion during eleven months of 2012-13 while it imported goods worth Rs 508.60 billion, according to Current Macroeconomic Situation of Nepal released by Nepal Rastra Bank (NRB). </div>
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The pegging regime has both advantages and disadvantages. It helps to keep the fragile economy stable. But one never knows the real economic scenario of the country under such fixed exchange system. The Mundell-Fleming model, best known for its anti-pegged exchange rate philosophy, says that fixed exchange rate system restricts the effectiveness of having an independent monetary policy to achieve macroeconomic stability. </div>
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