“It is learnt that there are Nepali rupee exchange centres in Singapore, Qatar and UAE too.”

Foreign currency exchange outlets in Dubai were ready to exchange even Rs 1 million, he claimed.

The department suspects migrant workers were used as mules to carry Nepali notes, he said, adding that smugglers might also have used the open Indian border to carry Nepali notes to Gulf countries.

Mostly, Nepali migrant workers exchange dinars they with Nepali currency notes in Dubai and send the same home via their friends. This trend will hit dollar inflow remittance, according Shrestha. “It will also hit the national economy.”

The re-routing of the Nepali currency will hit the US dollar inflow as remittance. The US dollar is important to pay the import bill of the country and the current trend, if increases, will make it difficult for the country to clear import bill, as its US dollar reserve will deplete.

Recent months have witnessed increase in remittance inflow by 37.1 per cent to Rs 162.37 billion in the sixth month of the current fiscal. This is also due to weak Nepali currency against the dollar. In US dollar terms, remittance inflow increased by 26.7 per cent to $2.07 billion compared to 14.8 per cent growth for the same period last year. But smuggling of Nepali currency will hit remittance inflow hurting foreign exchange reserves essential for imports.

Nepali currency exchange facility in Dubai has provided ground for suspicion that big traders could be involved in illegal import of under-invoiced goods from third countries, Shanta Bahadur Shrestha said.

An official at the Ministry of Finance suspected terrorist financing may be behind this. “The currency might have reached there to pay ransom in abduction cases,” he said. “Department of Money Laundering Investigation should take initiative to address the issue.”

Nepal Rastra Bank should carry out a survey to assess the real situation of bulk cash smuggling, according to him. The central bank should also assess the problem and take appropriate measures to control cash smuggling, he suggested.

Shakya is the founder and CEO of Beed Management, a management consulting and advisory company based in Kathmandu, Nepal. His book Unleashing Nepal: Past, Present and Future of the Economy has had a widespread influence on the study and discussion of Nepal’s economy. In 2002, Shakya was awarded a Hubert H. Humphrey Fellowship by the US Department of State.

“Sujeev Shakya holds a very prominent position within Kathmandu’s economy,” said Yaesshna Pillay ’13, secretary of EKTA. “He also seemed like a great speaker to bring to Smith to enlighten our community on a South Asian nation that is sometimes overlooked.”

Shakya focused his talk both on the private sector and the influence of politics in Nepal, whose economy is quickly developing after its government democratized several years ago, leading to an expansion of entrepreneurship and infrastructure construction.

However, democracy did not lead to the end of corruption and red tape. Businesses still face challenges, such as the allocation of projects by nepotism rather than qualifications. This worry often comes with loss of confidence and economic inefficiency.

“In Nepal there is a common feeling within the citizens that the politicians do not really work for the good of the country but they work for the good of themselves. Red tape-ism and corruption is a common malpractice,” said Trishagni Sakya ’12, who spent last summer interning with Shakya and was the main organizer of the event.

Shakya’s insights and opinions were especially welcomed by Nepali students. Eager to learn more about their home country’s economy, students from all five colleges asked how they can contribute to this development.

“International Nepali students should become good ambassadors of Nepal. They should give a perspective of Nepal [and] inform the larger audience,” Shakya said. “I think a lot of trained and educated students are coming back and have already made a lot of difference.”

When asked about the role of women in Nepal’s economy, Shakya said: “Nepali women are given much more power. Substantially large numbers of women entrepreneurs are working in Nepal, especially when compared to other Southeast Asian countries.”

The talk also opened the eyes of non-Nepali students, who learned more about the difference between North Nepal and South Nepal and the connection between Nepal and India and Nepal and China.

“I feel like students like us should first gain experience from the properly structured organizations in the U.S. and then take ideas back home and implement them,” Trishagni said. “It’s true that Nepal has problems and impediments, but we need people who see opportunities in these problems. The fact that Nepal is one of the least developed countries also gives way to the fact that much can be done there.”

Under the agreement, a person of Nepalese origin can remit funds in Indian rupee to a beneficiary in Nepal through any of the designated branches of UBI.

The remitter will be provided with a unique PIN which will then be communicated by the remitter to the beneficiary in Nepal.

The beneficiary in Nepal can claim the funds within seven days in Nepalese Rupee by producing the PIN along with identity proofs at any of the 31 branches of Global Bank or the 1,741 Claim Outlets of the International Money Express (IME).

“The Indian side indicated willingness to favourably consider priority development projects in various sectors as requested by Nepal and suggested that these may be reviewed and considered in detail at a meeting of the joint commission at the earliest,” according to a joint statement issued at the end of Bhattarai’s maiden visit to India as the Nepal PM.

It is understood that India would be considering Bhattarai’s request for the soft loan and building an IIT and polytechnic in Nepal, a new airport in Kathmandu and phase II of optical fibre link under this provision of the joint statement.

Sources assured that these requests put forward by the Nepalese PM would be considered on a priority basis.

India had earlier extended a Line of Credit (LoC) worth Rs. 4,892 crore for Bangladesh during the visit of PM Sheikh Hasina here in January 2010. It was the highest ever LoC offered by India to any country. During Bhattarai’s trip the two sides signed a LoC worth Rs. 1,223 crore for infrastructure projects.

It has been learnt that the framing of the joint statement witnessed tough negotiations between the two sides and was concluded minutes ahead of Bhattarai’s departure for Kathmandu on Sunday evening after his visit to Uttarakhand on Sunday morning.

PM Manmohan Singh offered to increase the Indian Technical and Economic Cooperation programme slots for Nepalese students to 200 every year, the joint statement said.

Nepal has been facing severe power crisis. And in response to Nepal’s request for an increase in electricity export to 200 MW to cope with the deficit during the dry season, India conveyed readiness to supply maximum electricity possible on existing transmission lines. It also suggested that technical experts of the two countries should meet to explore the options available for enhancing electricity trade between India and Nepal.

Price volatility continued to rock bullion market, however, by Friday gold became cheaper as compared to prices recorded on Sunday.

Nepali rupee strengthened by 51 paisa against a US dollar over the week, after tumbling sharply over the past two weeks. This made imports cost go down, but also lowered income of exporters and remittances receivers. On Friday, a dollar was valued at Rs 78.60.

Nepal Rastra Bank (NRB), the country´s monetary authority had set the exchange rate of dollar at Rs 79.11 when the market opened this week on Sunday.

As investors in India continued to pull out their money to invest in safer assets, rupee shed 29 paisa overnight on Monday and further fell down by 18 paisa on Tuesday. However, the trend reversed fast, with rupee enjoying a rebound of 70 paisa on Wednesday.

Rupee further gained 2 paisa compared to previous day on Thursday and strengthened further by 26 paisa when the market closed on Friday.

Similarly, rupee gained 12 paisa against a euro, but shed 74 paisa against a pound sterling. A euro was exchanged at Rs 106.91, while a pound sterling was valued at Rs 122.76 on Friday.