As the rupee goes on a free fall, India and Nepal fear currency crisis
Kathmandu (AsiaNews) - As collapse looms on the horizon, India is poised for a currency crisis as the rupee reaches a new low. This, in turn, is dragging down Nepal and its currency.
Yesterday, the Indian currency lost another 4 per cent, reaching 68.7 rupees against the US dollar. Today, the Nepali rupee dropped to 105.35 per dollar.
For some analysts, the governments of the countries want to discourage imports in order to protect their respective foreign currency reserves.
This is why India's Finance Minister P Chitambaran met top bankers and trade experts on Sunday.
Meanwhile, Nepal is closely monitoring India's moves. As today's plunge shows, the fate of the Nepali rupee is closely tied to that of India.
"If India's currency rises, Nepal's currency rises automatically," said Yubaraj Khatiwada, governor of the Central Bank of Nepal.
"This crisis," he explained, "shows that we need to rethink our financial policies."
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