A black market thrives from this illicit business fuelled recently by the pilgrimage season
Currency: The country’s currency, the ngultrum (BTN) is depreciating against the Indian rupee (INR) in the informal and illegal currency exchange market in Jaigaon, across the border from Phuentsholing.
The ngultrum is pegged to the Indian rupee. But in the informal business, Bhutanese have been buying INR by paying more ngultrums. The rate has increased by Nu 2 since November.
Today Bhutanese are charged Nu 6 extra for every INR 100. However, it depends on the amount exchanged. Small bargains can be availed if the amount is higher. Kuensel found the rates are brought down by 5.8 percent to six percent, if the amount is more than Nu 50,000.
NS Road in Jaigaon is notorious for selling and buying INR. There are three small shops that openly deal in currency exchanges. Groups of four to five people crowding one of these shops, just big enough to accommodate two men, is a common sight. People stand in small queues and take turns to make the deal. The business is booming, going by the cartons filled with cash.
The sudden increase of charge rates, which eventually diminished the BTN value, businessmen in Phuentsholing attribute to the rush in the number of people heading to Bodhgaya for pilgrimage. It led to a huge demand of INR among the desperate pilgrims.
Although the pilgrimage season has come to an end, the exchange rate has not come down. On the other hand, the orange season, entrepreneurs say, is another contributor to the illegal selling and buying of INR.
Although the cash transaction on the export of the mandarin is carried through letter of credits in dollars, it is the local sales of rejected oranges that indirectly contribute to the illegal business.
A businessman in the town said the contractors engaged in export of reject oranges that are sold in Jaigaon, Siliguri, and Alipurduar mint INR.
“They create the other side of the illegal business,” he said, explaining that they sell in INR, targeting higher returns in BTN.
However, the commission from selling INR is less than the rate charged in buying. It is five percent, which means a person selling INR 100 will receive Nu 105 in return.
The difference of Nu 1 in buying and selling is the profit a broker makes. Sources say a broker easily earns about Nu 10,000 to Nu 15,000 in a day.
While this business cannot be controlled in Jaigaon, many people in Phuentsholing are now raising questions about those buying BTN inside the country, which the brokers bring.
“Bhutanese buy INR with BTN, but who is buying this same BTN?” a businessman questioned, explaining that BTN used in buying INR in Jaigaon cannot remain there forever as it cannot be used in other parts of India. “There’s definitely a big loophole and the concerned authorities must investigate.”
A Phuentsholing resident said Bhutanese are at the losing end. “If a needy Bhutanese buys INR 100 from Jaigaon paying a fee of Nu 6, the broker will have Nu 106,” he said, adding the same BTN would come to Bhutan and get exchanged with INR at par. “This is a big loss to the Bhutanese.”
Illegal exchange offers of INR and BTN have been there for almost four years now. It started with the rupee crunch in 2011.
In the initial days of the crunch, the commission brokers charge ranged from seven to nine percent. In August 2014, the charges fluctuated from four to six percent.
It had decreased to four percent in November 2014. It is now six percent.
By Rajesh Rai, Phuentsholing