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 why does the value of our rupees keeps fluctuating?
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Posted on 02-13-10 6:46 PM     Reply [Subscribe]
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why is the value of our rupees keeps fluctuating ?. One month its Rs 78.00/ $ while next month its Rs 74.00/$ 
    any Economist here who knows the answer. Really curious..

 
Posted on 02-13-10 6:57 PM     Reply [Subscribe]
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Because the American dollar is fluctuating. Nepalese currency is in Indian currency basket system. If you look at the Indian rupee it also fluctuating. Whole world currencies compete with the US dollar. That all I know, If I am wrong, dear Shaja experts don’t hesitate to correct me.
 
Posted on 02-13-10 9:29 PM     Reply [Subscribe]
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The floating exchange rate system is effect of various
demand and supply in an economy described below.

1) Current account balance: The trade balance is
the difference between the value of exports and imports. i.e lets says if Nepal
is exporting more than importing, then it would have a positive trade balance
with USA and that leads to the higher demand for the home currency which is
rupees. As a result the demand will translate in to appreciation of the
currency and vice versa.



2) Inflation rate: Theoretically, the rate of
change in exchange rate is equal to the difference in inflation rates
prevailing in the 2 countries. So, whenever, inflation in one country increases
relative to the other country, its currency falls down. As we can see weaker
the dollar is, weaker our rupees.



3) Interest rates : The funds will flow to that
economy where the interest rates are higher resulting in more demand for that
currency. European investors are investing in U.S market because of the fear that
euro currency will deteriorate because of the budget deficit in Greece, Spain
and Portugal that’s a good sign for us economy.



I hope this
helps u a bit in understanding a micro concept of economy, but still there are
others factors that need to be considered.


 
Posted on 02-16-10 11:27 AM     Reply [Subscribe]
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जस्तो हाम्रा नेताको बोली तेस्तै हो हाम्रो नोटको भ्यालू, सधैं ललबराइ रहने ? १९९० देखी कुनै कुरो ठीक ले भै रहेछ त ?

 


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