9 August, Kathmandu: Nepali rupee plummeted to record low of 98.60 against US dollar this week after the Indian currency, with which rupee is pegged, weakened against the dollar. The local currency shed 25 paisa against US dollar over the week.

Nepal Rastra Bank (NRB), the central monetary authority, opened currency trading on Sunday with exchange rate of rupee against US dollar set at 97.55. Rupee lost 50 paisa to 98.05 on Monday. Though the local currency gained 32 paisa on Tuesday to close at Rs 97.73, it shed a whopping 87 paisa to 98.60 on Wednesday.

According to Reuters news agency, the Indian currency slid to a record low against US dollar on Wednesday after the Reserve Bank of India (RBI) began engineering an increase in short-term money market rates to attract speculators. This happened as rising overnight rates led to higher long-term borrowing costs, threatening to cause a fresh spate of bad loans, Reuters said.

Rupee, however, rallied over the next two days, gaining 60 paisa on Thursday and another 20 paisa on Friday to close at 97.80.