The Nepali rupee fell to a record low against the US dollar on Saturday, adding pressure to government finances as the country faces a rapidly rising public debt.
Nepal Rastra Bank (NRB) fixed the exchange rate at Rs 147.41 per US dollar, marking a depreciation of around Rs 10 over the past six months. As the Nepali currency is pegged to the Indian rupee, its decline has followed the weakening of the Indian currency, which touched an all-time low of INR 92 per US dollar on Friday.
Analysts attribute the fall in the Indian rupee to weak domestic markets, continued foreign fund outflows, higher crude oil prices and rising US Treasury yields, which have strengthened the dollar globally.
NRB officials said the stronger dollar has sharply increased Nepal’s external debt liabilities. According to the Public Debt Management Office (PDMO), total public debt reached Rs 28.06 trillion by mid-January, up from Rs 26.74 trillion at the end of FY 2024/25. Of this, external debt stood at Rs 14.87 trillion, surpassing domestic debt of Rs 13.19 trillion and accounting for 53 percent of the total— the first such instance in recent years.
In the first six months of the current fiscal year, the government borrowed Rs 214.55 billion and spent Rs 152.89 billion on debt servicing. Currency depreciation alone increased public debt liabilities by Rs 70.68 billion during the period.
Economist Keshab Acharya notes that while Nepal’s overall debt remains manageable, rising debt servicing costs and a growing share of external debt have increased fiscal risks.
A weaker rupee could, however, support remittances, tourism and exports, as earnings in these sectors are largely dollar-denominated. At the same time, depreciation is expected to raise project costs, as Nepal depends heavily on imported capital goods.
