Because the American dollar is fluctuating. Nepalese currency is in Indian currency basket system. If you look at the Indian rupee it also fluctuating. Whole world currencies compete with the US dollar. That all I know, If I am wrong, dear Shaja experts don’t hesitate to correct me.

bisal · Feb 13, 2010 6:57 PM

The floating exchange rate system is effect of various demand and supply in an economy described below. 1) Current account balance: The trade balance is the difference between the value of exports and imports. i.e lets says if Nepal is exporting more than importing, then it would have a positive trade balance with USA and that leads to the higher demand for the home currency which is rupees. As a result the demand will translate in to appreciation of the currency and vice versa. 2) Inflation rate: Theoretically, the rate of change in exchange rate is equal to the difference in inflation rates prevailing in the 2 countries. So, whenever, inflation in one country increases relative to the other country, its currency falls down. As we can see weaker the dollar is, weaker our rupees. 3) Interest rates : The funds will flow to that economy where the interest rates are higher resulting in more demand for that currency. European investors are investing in U.S market because of the fear that euro currency will deteriorate because of the budget deficit in Greece, Spain and Portugal that’s a good sign for us economy. I hope this helps u a bit in understanding a micro concept of economy, but still there are others factors that need to be considered.

houston_kancho · Feb 13, 2010 9:29 PM

जस्तो हाम्रा नेताको बोली तेस्तै हो हाम्रो नोटको भ्यालू, सधैं ललबराइ रहने ? १९९० देखी कुनै कुरो ठीक ले भै रहेछ त ?

syanjali · Feb 16, 2010 11:27 AM