The withdrawal of India’s Rs 500 and Rs 1,000 notes has led to Indian currency being illegally exchanged at a premium in towns and markets in the border areas of Nepal.
Nepalese citizens, who have been facing problems in exchanging the withdrawn notes held by them, are now grappling with the problem. A report from Bhairawa, a city close to India’s Uttar Pradesh state, said the activity was rampant and Indian nationals were allegedly involved in it.
Though Indian currency has been exchanged at a rate of Nepali Rs 160 for Indian Rs 100 for decades, people now have to pay an additional Nepali Rs 30 for every Indian Rs 100 while exchanging currency at market towns such as Sunuwal and Nautwana, a media report said.
The illegal exchange of Indian currency is becoming rampant in border districts such as Parsa, Banke, Nawalparasi, Kanchanpur and Rupandehi, according to reports.
Since Indian currency is widely accepted in Nepal, the country has been hit hard by the Indian government’s demonetisation drive. Among the worst affected areas are the southern plains bordering India.
No agreement has been reached so far by the central banks of Nepal and India for the exchange of the withdrawn Indian notes.
Nepalese citizens have been paying higher exchange rates as they fear they may not be able to exchange their Indian Rs 500 and Rs 1,000 notes through normal banking channels. They also fear the authorities may set a ceiling for such exchanges and their Indian currency could turn into useless paper.
Some are even willing to exchange their Rs 500 and Rs 1,000 notes at lower rates. People have also received messages on Viber and WhatsApp with offers to exchange Indian currency. One such message received by a businessman in Kathmandu read, “Anyone want to change Indian banned 500 or 1,000 currency notes? Will give Rs 500 NC for IRs 500.”
According to Nepal’s central bank, nearly Indian Rs 500 and Rs 1,000 notes worth Rs 33.6 million are in the banking channels. There are no official figures for notes in the possession of traders, families of migrant workers and the general public.
The Indian government has formed a committee to look into the issue of demonetised currency notes held by people in Nepal and Bhutan. Nepal’s central bank also formed a panel to look into the issue and prepare guidelines on easing the process. Indian and Nepali officials will meet soon and resolve the issue affecting millions of Nepalese, officials said.