Country’s rupee reserve of INR 27.5-Billion
As of September this year the country’s international reserve position was at USD 1.17-B, of which the rupee reserve forms Rs.27.5-B, and USD 746.3-B which is a convertible currency reserve
Ngultrum (Nu) is not a legal tender outside the borders that’s why foreign currency reserve is essential for Bhutan. More than 80 percent of the country’s imports are from India thus for an import-driven country, rupee reserve is necessary.
In the first nine months of the year, the rupee reserve was highest recorded. However, November last year was recorded as the country’s highest rupee stock with the amount of Rs. 31-B.
According to the Royal Monetary Authority’s (RMA) monthly statistical bulletin, the total reserve is enough to finance 13 months of merchandise import. Convertible currency reserve alone is adequate to finance 50.8 months of import. However, the rupee reserve will meet 5.6 months of preeminent import.
The section seven of the article 14 of the Consti- tution of the Kingdom of Bhutan stated that a minimum foreign currency reserve that is adequate to meet the cost of not less than one year’s essential import must be maintained.
In the past, when the country was hit with rupee shortage, the country has sold convertible currency to restore the rupee stock. Commercial borrowing in rupee was also backed by the country’s convertible currency reserve.
The government will, however continue to sell the convertible currency reserve as and when required. Reserves are also used to service external debts. As of June last year, the country’s outstanding rupee debt stood at Rs.118B and convertible currency debt was recorded at USD 663-m.