Roman,

What you say is partially right--but your argument that remittance is decreasing and NC can't be pegged with IC forever is probably invalid. First, it is the growth rate of remittance that decreased in the latest report, but the demand for Nepali men is as robust aboard as ever, with new markets opening up. The latest report of Malaysia increasing the demand of Nepali labor (because they banned Bangladeshi laborers), and across-the-board increase of salary in gulf states points to something positive.

Regarding IC, what you forget is Nepal rightnow has a healthy foreign currency reserve of almost 4  billion dollars. The trade deficit with India is primarily our own undoings--go to cities of Nepal rightnow and people have bought cars en masse last year. Cars have become new motorbikes and we buy almost all cars from India (even non Indian brands). Whatever industries we had were closed down by the Maoists and the remainings are harrassed. At least, 3 million people have job that pays at least 200 dollars per month, and they want to buy clothes/cars/lands and you see why we have increasing trade deficits with India. But it doesn't mean we can't purchase IC. We have purchased IC by paying dollars to Indian central bank lately, because we have enough forex to cover our purchases.

Hence, I don't see any devaluation in the offing. There has been rumors, but the rumors have been quashed by central bank officers. And I agree with them for now.

I think there will be short term land value devalution rightnow, as people are unlikely to have karods at their hands, and the banks are now constrained from investing in land. Districts outside KTM are likely to be hit harder than KTM . But unless banks can find industries that give return of more than 15% per year, they will find a way to inject money in land and encourage speculation and land price will continue to be high. However, signs of impending industrialization abound, specially with cement, rods, agro-products, hydropower industries starting to gain momentum rightnow. Let's pray these industries succeed, and people will flock to put money in other factories.