Nepal Currency Depreciation Impact on Economy (2025/26)
The Nepali rupee has depreciated to 147.94 NRs/USD by mid-March 2026, the weakest level in history. This depreciation has wide-ranging effects on Nepal's economy — from boosting remittance values to increasing import costs and inflation.
Exchange Rate Movement
NPR moved from 140.09/USD (mid-Aug 2025) to 147.94/USD (mid-Mar 2026) — a 5.6% depreciation in 8 months. The FY 2024/25 annual average was 136.29, making the current rate ~8.6% weaker than the prior year average.
Winners from Depreciation
- Remittance recipients: Workers' remittances grew +37.67% in NPR vs +31.02% in USD — the ~6.7% gap is the exchange rate benefit
- Exporters: Nepali goods become cheaper in foreign markets — exports grew +20.83%
- Tourism sector: Nepal becomes a cheaper destination for foreign tourists
Losers from Depreciation
- Importers: Rs. 1,289,250.23M in imports cost more in NPR — especially petroleum (Rs. 185,208M)
- Students abroad: Education costs in USD/AUD/GBP become more expensive — Rs. 88,924M outflow growing
- Foreign debt holders: Government loan repayments in foreign currency cost more in NPR
- Consumers: Imported goods (electronics, vehicles, medicine) become pricier
Depreciation and Inflation Link
Nepal's CPI inflation rose from 1.11% (Nov 2025) to 3.62% (Mar 2026). Currency depreciation is a contributing factor — imported goods cost more, pushing up domestic prices. With 56.16% of imports from India and 20.61% from China, any NPR weakness directly affects consumer prices.
The Remittance Cushion
Despite the negative impacts, depreciation's effect on remittance values provides a significant cushion. Workers' remittances at Rs. 1,449,652.62M more than offset the trade deficit (Rs. 1,098,138.20M), maintaining a current account surplus of Rs. 552,847.68M.
Conclusion
Currency depreciation is a double-edged sword for Nepal. The remittance boost and export competitiveness gains partially offset the import cost increase and inflationary pressure. With the NPR pegged to INR, Nepal has limited independent currency policy — making it essential to build export capacity and reduce import dependence for long-term resilience.