Foreign Exchange Rates in Nepal are fixed by the Central Bank of Nepal that is Nepal Rastra Bank and different commercial banks of Nepal.

Nepal Foreign Exchange Rates: Coming Soon

Nepal has open market exchange rate for following currencies that are US Dollar, Canadian Dollar, Swiss Franc, Chinese Yuan, Japanese Yen, Saudi Arabian Riyal, Singapore Dollar, European Euro, UK Pound Sterling, Australian Dollar, Qatari Riyal, Thai Baht, UAE Dirham, Malaysian Ringgit, Bahrain Dinar, Kuwaiti Dinar, Hong Kong Dollar, Swedish Kroner, South Korean Won and Danish Kroner. Whereas, only for Indian Rupees, exchange rates are fixed by Nepal Rastra Bank for Nepalese Rupees, and all other currencies have open market exchange rates. The open market exchange rate quoted by different banks in Nepal may differ from the central bank that is Nepal Rastra Bank.

The foreign exchange market also known as Forex market is all about buying and selling that is trading of foreign currencies. Individuals or companies buy foreign currencies, hold it for some time, and then sell it when the exchange rates become higher. The forex market which is also called FX market is not based on investing in business but it is only trading of foreign currencies which can be quite profitable and safe if planned carefully. The trading takes place with two different currencies of two countries.

Disclaimer: The Exchange Rates for Nepalese currency displayed on this website are from Central Bank of Nepal. The exchange rates displayed on this website may change without prior information anytime during the business hours. We bear no liability due to the fluctuation of foreign exchange rates to any financial loss that may occur with the use of this website.

What is Foreign Exchange or Forex?

The foreign exchange market or currency market or Forex (FX) is a global decentralized or over-the-counter (OTC) market which trades the currencies and also determines the foreign exchange rate. The foreign exchange market or forex includes all aspects of buying, selling and exchanging currencies at current or determined prices.

Foreign exchange market is the most liquid financial market in the world which works through financial institutions and operates on several levels. Several financial institutions and traders in the forex market include governments, central banks, commercial banks, institutional investors, financial institutions, currency speculators, commercial corporations, and individuals. Normally, in a foreign exchange transaction, a buyer purchases some quantity of one currency by paying with some quantity of another currency.

In the forex market, banks turn to a smaller number of financial firms known as dealers which are most of the time are bank themselves. These firms are involved in large quantities of foreign exchange trading. And when banks are involved, then this behind the scene market is called the interbank market which also includes insurance companies and other kinds of financial firms also. There can be very large trades between foreign exchange dealers which may involve hundreds of millions of dollars. Forex also has a supervisory entity to regulate the market for sovereignty issue when involving two currencies.

The larger International banks are the main participants in this market. Many financial centers across the globe act as anchors to trade between a wide range of multiple types of buyers and sellers around the clock, except on weekends. As currencies are always traded in pairs, the forex market never sets a currency’s absolute value. But they are rather determined with the relative value by setting the market price of one currency if paid by another currency. For example, 1 US dollar will be worth to X NRS, CAD, or CHF, or JPY, etc.

The forex market assists international trade and investments by enabling currency conversion. For example, foreign exchange market permits a business in Nepal to import goods from European Union member states and pay Euros, even though its income is in Nepalese Rupees. The foreign exchange market also supports direct speculation and evaluation relative to the currencies values and the carry trade speculation, based on the differential interest rate between two currencies.

The foreign exchange rates are determined in the foreign exchange market, which is open to a wide range of different types of buyers and sellers, and where currency trading is continuously done every day except on weekends.

In the retail currency exchange market, money dealers such as commercial banks quote different buying and selling rates. Most of the trades in the foreign exchange market are to or from the local currency. The rate at which money dealers will buy foreign currency is called buying rate, and the rate at which they will sell that currency is known as Selling rate. The quoted rates will add an allowance for a dealer’s profit in trading, or the profit may be recovered in the form of a commission or in some other way. And they may include different rates that are quoted for cash as a documentary form or electronically.

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The perspective of bank foreign exchange trading

Buying rate: The buying rate or purchase price is the price used by the foreign exchange bank to buy foreign currency from the customer. Buying rate is the exchange rate where the foreign currency is converted to a smaller number of domestic currencies which determine how much a country’s currency is required to buy a certain amount of foreign currency.

Selling rate: The selling rate or foreign exchange selling price refers to the exchange rate used by the bank to sell foreign exchange to their customers. The selling rate determines how much the country’s currency needs to be recovered when the bank sells a certain amount of foreign currency.

Middle rate: The middle rate is the average of the bid price and the asking price which is commonly used in newspapers, magazines or for economic analysis.

Fluctuations in exchange rates  

The foreign exchange rates may fluctuate anytime. It will change whenever the values of either of the two component currencies change as in the foreign exchange one currency is relative to another currency and are traded in pairs. Any currency will become more valuable if the demand for currency is greater than the available supply of it. And it will become less valuable if demand is less than available supply. However, it does not mean people no longer want money. It only means they prefer holding their wealth in some other form, as in another currency.

Increased transaction demand for money or increased speculative demand for money may increase the demand for a currency. The transaction demand is mostly related to a country’s level of business activity, employment level and gross domestic product (GDP). If the number of people is unemployed, the less number of people will spend on goods and services. In the demand for money due to business transactions, Central Banks may have little difficulty adjusting the available money supply to accommodate changes.

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The purchasing power of the currency

The purchasing power of a currency is the Real Exchange Rate (RER), relative to another currency at current exchange rates and prices. Purchasing power is the ratio of the number of units of a given country’s currency necessary to buy goods from market in the other country, after acquiring the other country’s currency in the foreign exchange market, to the number of units of the given country’s currency that would be necessary to buy the same number of goods from the market directly in the given country.

Manipulation of exchange rates 

It can be an advantage in international trade if the country controls the market for its currency to keep its value low which is done by the national central bank engaging in open market operations in the forex market. It was widely asserted that the People’s Republic of China had been doing this over a long period of time during the 21st century.

Different countries like Iceland, Japan, Brazil, etc had a similar policy of maintaining a low value of their currencies in the hope of reducing the cost of exports and thus increasing their economies. A lower exchange rate lowers the price of a country’s goods in the market for consumers in other countries, but it raises the price of imported goods for consumers in the low-value currency country. Generally, exporters of goods and services will prefer a lower value for their currencies, while importers will prefer a higher value for their currencies.

Foreign Exchange Risk

Foreign exchange risk which is also known as FX risk or exchange rate risk or currency risk is a financial risk which exists when a financial transaction is denominated in a currency other than that of the base currency of the country.

The foreign exchange risk arises when there is a risk of appreciation of the base currency in relation to the denominated currency or depreciation of the denominated currency in relation to the base currency. There may be an adverse movement as the risk, in the exchange rate of the denomination currency in relation to the base currency before the date when the transaction is completed.

Foreign exchange risk also exists when the foreign subsidiary of a firm maintains financial statements in a currency other than the reporting currency of the consolidated entity. Exporting or importing goods or making foreign investments have an exchange rate risk which can have severe financial consequences, but steps can be taken to reduce the risk.

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