The reason why the Bhutanese currency “Ngultrum” is equal to the INR is a geopolitical one. It has its roots in ancient history and is a great boon for Indian tourists who go to the beautiful country of Bhutan to see its vibrant culture and lush natural beauty. Bhutan is one of the least populous countries of the world and has a strong and intricate relationship with India, the second most populous country in the world. Bhutan has been and still is one of the most untouched and virginal countries in the world.

Driven by Fear

During the first half of the 20th century Bhutan’s main foreign relations were with British India and Tibet. However after India’s independence in 1947 the British left India and handed over the reins of the country to its Indian leaders. Bhutan was fearful of Chinese communist expansion and feared that it might be taken over by giant China. To get a sense of security Bhutan signed a friendship treaty with India in 1949. They were even more fearful when China annexed Tibet in 1959 and looked for a closer with India which India duly provided.

A Beautiful Relationship

Since then Bhutan has had strong economic, military and strategic relations with India. One can say that Bhutan has lived safely under the umbrella of protection provided by India just like a younger cousin living happily under his elder brother’s protection. Though later Bhutan built warm relationships with other countries like Tibet, Japan, Bangladesh, and European countries, it has always enjoyed a special relationship with India.

A Win-Win Situation

So much so that Indian citizens can travel to Bhutan and vice versa without a passport or visa. However, they need to carry their national identity cards. Bhutanese people can work in India without any legal restrictions. The big reason why Bhutanese currency is equal in a way to Indian Rupees is that both countries have excellent relations and trust each other though Bhutan’s dependence on India has reduced over the years.

Beware of the Catch!

currency of bhutan
Photo: Instagram/papermoney_world

Coming back to money matters the Rupee is readily accepted in Bhutan. Most Indian tourists don’t even bother to exchange their Rupees for the Ngultrum and pay for their costs with Indian currency. So the Bhutanese currency to the Indian currency is roughly 1 Rupee = 1 Ngultrum. But be careful, there is a catch! Higher value notes like INR 500, INR 1000 and INR 2000 are not readily accepted by the Bhutanese people especially traders. Small amounts can be paid using Indian Rupees but if you buy a higher value item or service you have to pay them with their own official currency, the Ngultrum.

India is Big Brother

indian rupees

There is an economic reason as well for this phenomenon. India has helped Bhutan by sponsoring many projects in their country especially development projects. Bhutan is largely underdeveloped and most Bhutanese people still prefer to live the old traditional way. Due to this they are economically weak and their currency is not economically competitive with the other many much stronger currencies of the world like the American dollar or the Euro. So it has “Currency Pegged” its official currency with the INR.

This has made it possible for the Bhutanese Ngultrum to move with the INR. This is good for Bhutan who needs to be protected from the vagaries of global economics where profit is the only religion. This currency pegging with the INR also protects Bhutan in the global markets. It’s a win-win situation for both Bhutan and the Indian tourists who can move freely in Bhutan and satiate their love for travel and nature.

Enjoy the Party Now!

Though this is the current scenario it may not be the same in the near future. Both India and Bhutan are facing pressure from the globalization of world trade and may not be able to keep up their tents against this typhoon. However, that is a matter that will be faced in the future not right now. Till then the Ngultrum is equal to the INR and both the Bhutanese and the Indian people can enjoy the benefits of this situation. It’s time to continue celebrating!

Why is Bhutan Currency Equal to Indian Rupees?
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Why is Bhutan Currency Equal to Indian Rupees?
People have been pondering of late about the Bhutanese currency being equal to the INR. Is the Bhutanes Ngultrum really equal to the INR and can we exchange it for the same value? Keep reading to find out!
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Everlasting Celebrations
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