DEFINITION of 'NPR (Nepalese Rupee)'
NPR is an abbreviation or symbol for the Nepalese rupee, the legal currency of Nepal. There are three primary currency exchange rates in Nepal; the official rate is the central bank rate. The private bank rate is a little more generous but is also legal in Nepal. The final rate is only offered on the black market and is established by individual stores and by travel agents; this rate is extremely generous but is not legal.
BREAKING DOWN 'NPR (Nepalese Rupee)'
The NPR was introduced in 1932 and replaced the silver mohar, with the exchange rate being two mohar to one rupee. One rupee is comprised of 100 paisa. The NPR was pegged to the value of the Indian rupee in 1993. NPR is actually the currency code for the Nepalese rupee. The most common symbol used when referencing this currency is Rs, though Rp is also used. Paisa, the denominations of money that comprise the NPR, is a monetary unit used in several countries and can be likened to a penny in U.S. currency.
History and Currency
After its introduction, the NPR was pegged to the Indian rupee in 1933, with 1.6 Nepalese rupees being equivalent to one Indian rupee. Throughout the 1940s and 1950s NPR coins were created using brass, nickel and bronze. The first NPR banknotes were printed and distributed beginning in 1951. Denominations included one, five, 10 and 100 rupees. Aluminum coins were eventually introduced in 1966 that replaced the smaller denominations of one, two and five paisa. Brass coins replaced the 10 paisa coins. In 1971, 500 and 1,000-rupee denomination banknotes were added to circulation.
The Trouble with Currency Exchange
The three exchange rates for the NPR have made currency exchange troublesome. Only two of the three rates are legal, though, the exchange is not consistent between them. And though the private bank rate and the black market rate are more generous that the official exchange rate, the exchange does not favor the individual exchanging a foreign currency for NPR currency. For example, if an individual were to go to a private bank to exchange U.S. dollars for NPRs, the bank would take a good deal more out of each dollar than the individual would receive back in NPRs. The story is similar for the black market exchange rate, though, typically far worse for the individual exchanging U.S. currency. In many cases, the individual will end up with pennies back on each dollar. Also, after leaving Nepal, the rate of exchange back to the originating, or any other, currency is very small. Only up to 10% of all receipts for exchanges made from a foreign currency to NPRs will be returned to an international currency.