The sad saga of Ngultrum OneKipchu & Sonam Choden, Thimphu
Mar 10 2016
Many Bhutanese do not value or give importance to lower denomination Ngultrum notes. People say high inflation, over long periods, has eroded the intrinsic value of lower Ngultrum notes, especially one Ngultrum note.
While economists attribute this to high inflation, others believe it is due to lack of adequate financial literacy and saving culture. In the street, many said commodities in Bhutanese shops can be bought only with higher denomination notes. Also, while accepting changes, many shops use sweets and gums, in place of one Ngultrum notes.
A customer said, lower denomination notes are even scarce in the hands of shopkeepers who return changes to their customers in the form of sweets and chewing gums.
Another said, one Ngultrum notes did not matter much since it does not have any real value in the market. Most transactions in the market is settled in higher denominations.
In other areas, denominations of even higher notes including Nu 50 and Nu 100 are in scant supply in the country’s ATM machines.
There are also others who feel, the lower denomination notes should be considered of value if people inculcate saving culture.
Shopkeepers said most customers do not accept one Ngultrum notes while exchanging their money.
According to an economist, one Ngultrum note cannot buy anything. Therefore, it is not used efficiently and the currency will remain ideal. Moreover, there will be more pressure on higher denominations.
Professor of Economics, Sanjeev Mehta said there was no economic sense to have currencies of lower denominations, when they cannot buy anything. “I think it’s time for the government and the central bank to consider discontinuing printing.”
But the lower denomination notes are costing the central bank. One Ngultrum notes are printed at a cost of Nu 3-4. However, the central bank does not want to discontinue printing lower denomination notes. Central bank officials said, lower denominations are printed to keep inflation at bay. If discontinued, officials added, commodities in the market will priced higher than now.
Local economists responded, commodities are already priced higher even today.
The central bank’s deputy director of currency management, Deki Yangzom said, lower denomination notes should be treated with equal value like any other currencies.
The Central Bank released over 21 million one Ngultrum notes in 2012.