The trading team at PlutusFX takes a look at the Nepalese NPR:
It’s fair to say that Nepal has had a disastrous year, with two earthquakes causing death and destruction. Meanwhile the local currency has remained resilient. On April 24th, the day before the first quake, USD/NPR stood at 101.73, a week later it was 101.61.
The Nepalese rupee was introduced in 1932, replacing its forerunner, the silver mohar. Since 1993 it has however been pegged to the Indian rupee at a rate of 1.6 NPR to 1 INR. It is this pegging which explains why the NPR has remained steady through such disastrous times, while if the currency was freely trading, no doubt there would have been significant volatility. Clearly this has been advantageous for the many ex-pat Nepalese living in the community in the UK who has been very generously sending funds home to help their countrymen.
Major currencies tend to accepted in Nepal, along with the Indian Rupee, which is widely used. When sending payments to the region, it’s common to send in USD, which is converted locally. The issue of NPR is controlled by the Nepal Rasta Bank, which controls the exchange rate. Private banks however tend to offer a slightly more generous rate, while there is a black market, being keen to obtain foreign currency, is even more generous. The reason for such generosity is that there is an official limit on how much rupees can be exchanged onto international currencies. This is set at just 10% of all exchanges into the rupee for those leaving the country.