In late 2016, Narendra Modi, the prime minister of India, unexpectedly announced that his government was demonetising all Indian currency notes of Rs 500 and Rs 1,000. These notes were to be exchanged for newly minted notes. Not only did the move shock India, it also caught its neighbours off guard—especially Bhutan and Nepal, where the use of Indian currency is allowed. Bhisma Raj Dhungana, the director of the foreign-exchange management department of Nepal Rashtra Bank—the country’s central bank—told me that the new notes in the Indian market were circulated in Nepal as well. But the Indian government did not authorise the exchange of demonetised notes in Nepal with new ones. “India did not officially inform us if we can allow the circulation of these notes,” Dhungana said.
Was This Post Helpful: