Saturday, 25 April 2015
IC and BC (Rupee and Ngultrum - Tiru)
It is a known fact that the Bhutanese currency (BC) Ngultrum is pegged with the Indian Currency (IC) Rupee at par. Of late the pegging at par could not hold on, at least unofficially, and gave way to the market forces and the forces of the economics induced by some other external forces.
The direct problems of IC crunch were faced by the people living near the border towns. No IC means no shopping from across the border which is normally cheaper than buying from inside.
During the peak season of IC crunch the Ngultrum was not accepted at all in the Indian market, causing a lull in the business. However people found out a way to solve the problem themselves by devaluating the BC by about 20% initially and now it is around 10% lesser vis-a-vis IC. The papers reported about the prevailing unofficial exchange counters for the currencies and the troubles faced by the Bhutanese living in the bordering towns and the businessmen. We are all aware of the problem from our side but there is a story of problem faced from the other side too.
When the IC crunch first came up the Indian businessmen in the border towns were thrown in doldrums as the buyers were mostly Bhutanese. They thought that the time had come for them to shut down the business and leave somewhere. Accepting BC was not the option for they cannot get is exchanged back easily like before from the banks. So they had to sell the BC at lower rates to the people who were going to Bhutan for shopping and that was mainly the fuel and some foreign goods. The Indian tourists were encouraged to exchange IC to BC before they enter the country in the unofficial exchange counters. Which they readily did for it made them richer by 10%.
Due to the availability of the exchange counters, which are illegal, the Indians shopkeepers started accepting Bhutanese currency devaluating it by 10% if paid in BC.
The government of Bhutan through bank of Bhutan allowed 15000 IC to be withdrawn per month per account; this not only helped the Bhutanese to do business with the Indian, but this also encouraged people to make easy money by selling IC at 10% profit. Linking of ATM with that of Indian ATMs had made the withdrawing easier from the Indian ATMs.
Once a rice vendor, a farmer seeing me carrying IC asked me whether I would like to change BC with IC. It is the currency of my country, I should be ever willing to change it to preserve the trust and the buying capability of the currency of my country moreover it depicted the sovereignty of my country. But I denied, with heavy heart. Even when he tried to give me 10% extra I could not accept it and that might have sent a message to him whether he should accept BC from the Bhutanese buyer later. Where did we go wrong? I on personal level was not be able to solve that problem and felt real bad for rejecting my own currency.
The Indian vendors should be allowed to change BC to IC easily in the banks. If we do not honour our own currency who would? If it is not fake BC and if the banks facilitate the exchange of BC to IC promptly, the illegal exchange counter would die a natural death. If we flood the market with IC once, the hoarders and the illegal sellers would run for their money, and the honour for our currency would be back again stabilizing the country economically, at least at the grassroots level.