Question 1

How does Nepal Rastra Bank set exchange rates?

Accepted Answer

Nepal Rastra Bank (NRB) sets daily foreign exchange rates every working morning based on international market movements. For currencies other than the Indian Rupee, NRB monitors the global forex market and calculates reference rates using a weighted methodology that considers the previous day's closing rates in major financial centers. These rates are then published on NRB's official website and circulated to all licensed commercial banks and financial institutions across Nepal.

Question 2

Why is the Nepali Rupee pegged to the Indian Rupee?

Accepted Answer

The Nepali Rupee has been pegged to the Indian Rupee at a fixed rate of 1.6 NPR = 1 INR since 1993. This peg exists because of the deep economic ties between Nepal and India — India is Nepal's largest trading partner, accounting for over 60% of total trade. The fixed peg provides stability for cross-border commerce, simplifies transactions for millions of Nepalis working in India, and reduces exchange rate risk for businesses operating between the two countries. However, it also means Nepal's monetary policy is closely tied to India's economic performance.

Question 3

What is the difference between buying rate and selling rate?

Accepted Answer

The buying rate is the price at which a bank or money changer purchases foreign currency from you (when you convert foreign currency to NPR). The selling rate is the price at which they sell foreign currency to you (when you buy foreign currency with NPR). The selling rate is always higher than the buying rate — this difference is called the spread, and it represents the financial institution's profit margin. NRB publishes its own buying and selling rates, and commercial banks set their rates within the margins allowed by NRB regulations.

Question 4

How often are exchange rates updated in Nepal?

Accepted Answer

Nepal Rastra Bank publishes new exchange rates once every working day, typically in the early morning before banking hours begin. These rates remain valid for the entire business day until new rates are published the next working day. On Saturdays (Nepal's weekly holiday) and public holidays, the rates from the previous working day remain in effect. Commercial banks may update their own customer-facing rates during the day based on market volatility, but NRB's official rate changes only once daily.

Question 5

Why do exchange rates at banks differ from NRB rates?

Accepted Answer

Commercial banks and licensed money changers are permitted to add a margin (spread) on top of NRB's published rates. This margin covers their operational costs, risk management, and profit. The size of the spread varies between institutions and may also differ based on the transaction amount and type. For large transactions or corporate clients, banks may offer more competitive rates. It is always advisable to compare rates across multiple banks and authorized money changers before making a currency exchange, especially for significant amounts.

Question 6

What currencies can I exchange in Nepal?

Accepted Answer

Nepal Rastra Bank publishes rates for over 20 major world currencies including the US Dollar (USD), Euro (EUR), British Pound (GBP), Australian Dollar (AUD), Canadian Dollar (CAD), Japanese Yen (JPY), Chinese Yuan (CNY), and many others. The Indian Rupee (INR) is exchanged at the fixed peg rate. Most commercial banks in urban areas can exchange these major currencies, while authorized money changers at tourist areas, airports, and border towns also provide exchange services. Some less common currencies may need to be exchanged through specific banks that deal in those currencies.

Understanding Foreign Exchange Rates in Nepal

The NPR-INR Fixed Peg

Buying Rate vs Selling Rate

Remittance and Daily Life

Currency Converter

Frequently Asked Questions