Tourism, export-based industries upbeat as rupee falls

Nepali currency may have witnessed a freefall in the past few days, hitting Rs 105.35 against per US dollar and discomforting many, but there are some who say there is no need to fall into a spiral of pessimism.

Bharat Joshi, Resident Manager, Hotel Yak & Yeti, says, “Our room revenue will go up by at least 10 per cent with the rupee’s fall.” Some others engaged in tourism business, where travel packages are sold in US dollars, also see the fall of rupee against the USD in good light. “We will be getting more Nepali rupees while exchanging dollars paid by the foreign clients,” Pabitra Bahadur Karki, President of Nepal Association of Tour and Travel Agents, said. “This will definitely boost income of the tourism sector, including travel, rafting and trekking agencies.”

Rupee’s slump is also expected to provide leverage to foreign travellers to spend more as they will be receiving over Rs 100 for every dollar they exchange. Others who are optimistic about benefits in the wake of rupee’s crash are garment and carpet exporters. “We are likely to receive more orders from foreign buyers as rupee’s fall has made Nepali goods cheaper for them. We hope they won’t bargain much now,” Uday Raj Pandey, President, Garment Association Nepal, said.

With this, capacity utilisation of garment industries, which hovers around a mere 40 per cent due to fall in orders from the international market, is expected to go up around 50 per cent.

Similar pattern is likely to be evident in the carpet industry. “Since carpet manufacturing is labour-intensive with labour cost contributing to almost 65 per cent of the total production cost, we are definitely in a better position to rake in more benefits,” said Anup Bahadur Malla, President, Nepal Carpet Exporters’ Association. But there are caveats. “First, we have shortage of skilled human resources,” Malla said. “Because of this we have not been able to make deliveries on time. This, in turn, is diverting buyers to the Indian market, where similar products are available for 30 per cent less.”

source: the himalayan times,28 August 2013