Nepal vs India Currency Trend Comparison (2025/26)
Nepal's currency (NPR) is pegged to the Indian Rupee (INR) at a fixed rate of 1.6 NPR = 1 INR. This means Nepal's exchange rate against the US dollar mirrors India's. Here's how the two currencies have moved and what it means for Nepal.
The Peg Mechanism
Unlike most countries, Nepal does not have an independent exchange rate against major currencies. The NRB maintains a fixed peg to INR, meaning:
- If INR = 83 per USD, then NPR = 83 × 1.6 = 132.8 per USD
- If INR weakens to 86 per USD, NPR automatically weakens to 137.6 per USD
- Nepal has no independent monetary policy tool to strengthen or weaken its currency against USD
INR and NPR vs USD (FY 2025/26 derived)
| Month | NPR/USD | Implied INR/USD |
|---|---|---|
| Aug 2025 | 140.09 | 87.56 |
| Sep | 141.14 | 88.21 |
| Oct | 140.52 | 87.83 |
| Nov | 142.00 | 88.75 |
| Dec | 144.67 | 90.42 |
| Jan 2026 | 144.31 | 90.19 |
| Feb | 145.13 | 90.71 |
| Mar | 147.94 | 92.46 |
India's Exchange Rate Drivers Affect Nepal
- US monetary policy: Higher US rates strengthen USD, weakening both INR and NPR
- India's trade deficit: India's merchandise trade deficit puts pressure on INR
- Foreign investment flows: FPI outflows from India weaken INR, automatically weakening NPR
- Oil prices: India is a major oil importer — higher prices weaken INR and thus NPR
Impact on Nepal-India Trade
Since NPR-INR is fixed, bilateral trade prices don't change due to exchange rate movements. Nepal's exports to India (Rs. 156,664.47M) and imports from India (Rs. 724,061.21M) are priced in INR/NPR, making them immune to USD fluctuations. However, when both INR and NPR weaken against USD, any goods priced in USD (petroleum, machinery from third countries) become more expensive for both countries.
Should Nepal De-Peg?
This is a perennial debate. Arguments for maintaining the peg: trade stability with India (59.49% of total trade), remittance stability (many workers in India), reduced transaction costs. Arguments against: no independent monetary policy, imported inflation from India, vulnerability to INR movements. Most economists favor maintaining the peg given Nepal's deep economic integration with India.
Conclusion
Nepal's currency story is effectively India's currency story. The NPR-INR peg means that when INR weakens against USD (as it has in 2025/26), NPR follows automatically. Nepal benefits from trade stability with its largest partner but sacrifices independent exchange rate policy — a tradeoff embedded in the country's economic architecture.