1 Dam – Nepal

In 1816, following the conclusion of the Anglo-Nepalese War (1814-1816) and the signing of the Treaty of Sugauli, Nepal's currency situation was one of transition and external pressure. The treaty imposed a heavy war indemnity of two million rupees on the Kingdom of Nepal, payable to the British East India Company. This immense financial burden, equivalent to several years of state revenue, strained the state treasury and necessitated the immediate mobilization of precious metal reserves, primarily silver, for the first installment. The indemnity payments directly drained the country's metallic wealth, creating a scarcity of coinage metal that would impact the monetary system for years.

Domestically, Nepal operated on a bimetallic system based on the Mohar (a silver coin) and the Dam (a copper coin), with the silver Rupee also circulating, particularly for larger transactions and external trade. The state mints, or Dhalam, in Kathmandu, Patan, and Bhadgaun, produced these coins, but the designs and purity were not always consistent. The period was marked by the circulation of a variety of older and debased coins alongside newly minted ones, leading to complexities in trade and valuation. The economic disruption caused by the war and the indemnity likely exacerbated any existing tendencies toward debasement as the state sought to stretch its remaining silver reserves.

Furthermore, the treaty cemented Nepal's new geopolitical reality, restricting its trade routes and forcing economic reorientation. While the formal and exclusive use of Indian currency in Nepal would not begin until later in the century, the 1816 settlement firmly placed the Nepalese economy within the British Indian sphere of influence. The financial exactions and the loss of the fertile Terai lands (partially returned later) weakened the state's economic base, setting the stage for future monetary policies, including the eventual fixing of the Nepalese rupee to the Indian rupee, which traced its origins to the subordination and debt imposed by this pivotal treaty.