NPR - Nepalese Rupee

History of Nepalese Rupee NPR

The Nepalese Rupee (NPR) was first introduced in 1932 to replace the silver mohar coin, and has since undergone several redesigns, with significant changes reflecting Nepal's transition from a monarchy to a republic in 2008.

Year of Establishment

In 1932, the Nepalese Rupee (NPR) was officially introduced to replace the silver mohar coin at a rate of 2 mohar = 1 rupee. Initially, the rupee was also known as "Mohru" in Nepali.

Development Phases of the Nepalese Rupee (NPR)

• The Bullet Paisa

In 1955, Nepal minted a 4 paisa coin using shell casings from World War II. This coin, called the "Nepal Bullet Paisa," was created to honor the bravery and victory of the Gurkhas (a group of soldiers from Nepal, renowned for their military service and exceptional bravery). Due to a limited supply of shell casings, this coin was minted only once.

• 1972 - 2007

During King Birendra’s reign, two major series of banknotes were issued: the first featured the king in military uniform, while the second depicted him wearing a traditional crown. New denominations of 2, 20, 25, and 250 rupees were introduced. Over time, the final version of the notes no longer featured the king’s image but instead displayed "Government of Nepal."

• 2007 - Present

In October 2007, a new 500 rupee note was issued with an image of Mount Everest, marking the transition from a monarchy to a republic in 2008. Banknotes in denominations of 5, 10, 20, 50, 100, and 1,000 rupees also featured Mount Everest, replacing the king's portrait.

Nepalese Rupee denominations

Currently, the Nepalese Rupee is issued in various denominations, including both banknotes and coins, to meet the payment needs ranging from small to large transactions in the economy.

Nepalese Rupee Banknote

• Commonly used: रु. 5, रु. 10, रु. 20, रु. 50, रु. 100, रु. 500, रु. 1000

• Rarely used: रु. 1, रु. 2, रु. 25, रु. 250

The commonly used denominations from 5 to 1000 rupees are primarily used for daily transactions. The denominations of रु. 1 and रु. 2 are less commonly used due to their low value. The denominations of रु. 25 and रु. 250 are typically used for special occasions, souvenirs, or have cultural and traditional significance.

Nepalese Rupee Coins

• Commonly used: रु. 1, रु. 2

• Rarely used: 1, 5, 10, 25, 50 paisa, रु. 5, रु. 10

The commonly used coins are रु. 1 and रु. 2 rupees, which are convenient for small transactions. Coins in denominations of 1, 5, 10, 25, 50 paisa, as well as रु. 5 and रु. 10 rupees, are rarely encountered, primarily circulating in rural areas or being collected due to their limited use in urban centers.

Current Exchange Rate of the Nepalese Rupee (NPR)

The current exchange rates of the Nepalese Rupee compared to USD and EUR are:

• USD/NPR: 1 USD = 134.5 NPR

• EUR/NPR: 1 EUR = 142 NPR

Factors Affecting the Value of the Nepalese Rupee

Here are the main factors influencing the value of the Nepalese Rupee:

• Dependence on India

The Nepalese Rupee is closely tied to the Indian Rupee with a fixed exchange rate of 1.6 NPR = 1 INR. This makes the NPR vulnerable to India's monetary policies, economic fluctuations, and inflation. The NPR is at risk of depreciation, which can put significant pressure on Nepal's economy.

• Trade Deficit

Nepal imports more goods than it exports, particularly from India and China. This results in a prolonged trade deficit, leading to increased demand for foreign currencies and a decline in the value of the Nepalese Rupee.

• Decline in Remittances

Remittances from Nepali workers abroad, especially from the Gulf countries and Malaysia, are an important source of foreign exchange. A decline in remittances reduces Nepal’s foreign exchange reserves, putting downward pressure on the NPR’s value.

• Tourism and Foreign Investment

Tourism contributes significantly to Nepal’s GDP. However, instability such as political unrest or natural disasters can severely impact tourist arrivals and foreign investment. This weakens the demand for foreign exchange and undermines the value of the NPR.

• Inflation

Domestic inflation, driven by rising import prices and domestic supply pressures, can reduce the purchasing power of the NPR. Since Nepal depends heavily on imports, high inflation could lead to a depreciation of the NPR in international markets.

Together, these factors exert downward pressure on the value of the Nepalese Rupee. The government needs to implement policies addressing foreign exchange reserves and the trade deficit to improve the NPR’s value in the future.

Based on these exchange rates, the NPR is of lower value compared to major currencies like the USD and EUR. This reflects Nepal's economy, which is affected by and dependent on several factors that do not possess competitive strength in the international market.