Tuesday 20th October 2020

COVID-19 Impacts Nepal’s Inflation Rate

The trade movement restrictions imposed by the Chinese Government have disrupted the imports to Nepal.
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COVID-19 Impacts Nepal’s Inflation Rate

Apart from impeding the Nepal’s tourism industry, the coronavirus has started threatening the nation’s ‘inflation’ rate.

Despite the Nepali Government’s target to check the consumer price index at maximum 6%, the average inflation has already surpassed the target and reached 6.82% in mid-January 2020.

According to the Nepal Rastra Bank (NRB), the increase in inflation in the first six months of the current FY 2019-20 is primarily due to the rise in prices of the consumable goods in the country.

However, the recent rise in prices of non-food items due to coronavirus outbreak has started taking their toll on the economy.

According to the NRB Spokesperson Gunakar Bhatta,  the rise in prices is primarily attributed to the fall in Nepali currency value against the US dollar and supply bottlenecks due to coronavirus epidemic.

Exchange Rate of Nepali Currency

The exchange rate of Nepali currency against the US dollar has declined to NPR 118.28 per dollar on March 9, 2020, reaching close to the record of NPR 119.33 per dollar on October 10, 2018.

Bhatta said the NPR has been falling after the local market placers started investing in gold and dollar against stocks and businesses on the back of COVID-19 threat.

“Investors have been considering also the successive cuts in interest rates by the US Federal Reserve and declining price of crude oil in the international market as indicators of the slump in business confidence,” exclaimed Bhatta.

Moreover, the adverse impact of coronavirus outbreak on the supply chain have further affected the inflation rate in Nepal.

The trade movement restrictions imposed by the Chinese Government have disrupted the imports from China to Nepal.

Nepal imports most of the raw materials and capital goods from various countries, mainly China and India.

Coronavirus Outbreak

So far, coronavirus has spread to at least 109 countries across the world killing 3,831 people and infecting 110,092 people.

China, the epicenter of coronavirus outbreak, has reported 3,120 death cases and 80,738 infection cases.


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