The Nepali rupee is pegged to the Indian rupee at NRs1.6:Rs1. We expect the Indian rupee to average Rs45:US$1 in 2011, representing nominal year-on-year appreciation of 1.7%. In 2012 we expect the Indian currency to continue appreciating against the US dollar, rising by 2.5% in nominal terms, to average Rs43.9:US$1. As a result, we forecast that in 2011 the Nepali rupee will average NRs72:US$1, appreciating to NRs70.2:US$1 in 2012.