Bhutan currency gets back to its usual glory in Indo-Bhutan border

SILIGURI: Bhutanese currency Nu has come back to its own glory in adjoining Indian markets as widely and freely acceptable tender. Though illegal, the practice is taking its usual shape after remaining in low key for three months.

Lack of official currency exchange facility in Indian is considered as the root cause behind the illegal practice. As the traders indicated, against the rate of 20% couple of days back, now Indian currency is available at 5% to 8% exchange rate against Nu.

That has made situation comfortable for traders to start accepting Nu again in markets like Jaigaon, the largest Indo-Bhutan border trade hub in India. INR and Nu are pegged to each other with same value. But, while INR is an official tender in Bhutan, Nu is not acceptable in India. But as a common practice, traders at border area Indian markets freely accept Nu from their Bhutanese buyers, then deposit that in own bank account in Bhutan and subsequently withdraw the amount in India in INR. But, the practice had a jolt three months back.

In order to arrest fast depleting Indian currency reserve, Bhutan imposed restrictions on INR disbursements. Banks in Bhutan stopped opining accounts of non-resident non Bhutanese and closed the existing ones. For Bhutan citizens, INR disbursement was restricted to Rs 50,000 per month.

"It had put overall situation under chaos," said Mr. B. Agarwal, Secretary of the Merchant's Association at Chamurchi, one of the most important Indo-Bhutan border trade points. On the other side, in absence of official currency exchange facility in Indian side, shortage of INR in market gave birth of illegal currency exchange trade at high rate.

To avoid this exchange expense, traders stopped accepting Nu. "despite loss in our business volume," said traders. "But, the situation has started coming back to normalcy with higher level of INR flow from Bhutan since last couple of days. It has reduced the exchange rate and we have started dealing with Nu again," accepted traders.

In October 2004, following Indo-Bhutan border districts coordination meet, the then Divisional Commissioner of Jalpaiguri in West Bengal Mr. B Ram and Mr. Tshering Wangda, the then Joint Secretary of Bhutan Home Ministry, proposed Indian Finance Ministry to set up official exchange facilities at Bhutan adjoining Indian areas. But, the proposal is yet to find any destination.