Nepali exchange rate mgmt effective: Dy Governor

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KATHMANDU, Feb 12 - Deputy Governor of Nepal Rastra Bank (NRB) Bijaya Nath Bhattarai has said that Nepalese exchange rate management over the past 10 years has been effective, as it has resulted in financial stability. Its efficacy is reflected in the favourable balance of payments over the years and sufficient foreign exchange reserves to cover more than 10 months of merchandise imports.

Deputy Governor Bhattarai was speaking while inaugurating the SAARCFINANCE seminar on "Issues in Exchange Rate Management" here in the capital Monday. Nepalese exchange rate policy has been guided by the need for exchange rate stability in the face of an open and porous border with India, with whom we have limited restrictions of capital flows. That is why, our currency remains pegged with the Indian currency, which has served well to maintain price and external sector stability of our economy, he added.

Nevertheless, there are important challenges that Nepal faces in bringing both domestic and external stability to ensure sustainable economic growth in the domestic economy. "Though it seems daunting, I am confident that answers will result from this seminar," he said.

If the exchange rate is not able to properly manage the pricing of the currency, this will result in volatile capital flows, dis-equilibirium in the external sector, financial instability and possibly exchange rate meltdown. This is what we observed a few years back in East Asia, he said.

Speaking on the occasion, Chief Economic Advisor to NRB, Dr Yuba Raj Khatiwada, said that exchange rate management holds a crucial significance in attaining stability in the economy. We have seen economic turmoil associated with misalignment of exchange rate and choice of inappropriate exchange rate regime.

Issues like Cost and Benefit of Different Exchange Rate Regimes: Polar Solutions and Intermediate Regimes, Country Papers, Exchange Rate Management in an Integrating World: Lessons for South Asia from East Asia, Exchange Rate Misalignment and Balance of Payments Crisis, Reserve Management and Intervention Strategy and Monetary Policy and Exchange Rate regimes are to be discussed in the seminar.

Thirteen participants from six South Asian Association for Regional Cooperation (SAARC) countries, and eminent experts on exchange rate management from International Monetary Fund (IMF), Asian Development Bank (ADB), Philippine Institute of Development Studies, Reserve Bank of India and Nepal Rastra Bank are also taking part in the three-day seminar organized by the NRB.

FNCCI and CII to hold seminar

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KATHMANDU, Feb 12 - The Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and Confederation of Indian Industries (CII) are holding a two-day seminar on "Joint Economic Council" in New Delhi tomorrow.

According to a FNCCI press released issued here today, the FNCCI and CII will hold discussions on the treaty and the joint investment between FNCCI and CII, along with corporate governance, HIV/AIDS awareness programmes, trade fair, human resource development, productivity and quality enhancement.

Likewise, Indian expertise co-operation on the development of the export processing zone in Nepal will also be put forward.

After the seminar, Nepalese representatives will take part in "Business Opportunity in South Asia", an economic conference, organised by CII.

The CII is also going to organise a two-day "Engineering Trade Fair" in New Delhi starting Wednesday.