BTN - Bhutanese Ngultrum

History of the Bahamian Dollar

Bhutan used metal coins that were minted in the Koch Bihar workshop, a region under Bhutanese protection located in the Indian state of West Bengal, prior to its conquest by the British East India Company.

In 1789, Bhutan issued the chhetram with denominations of ½ rupee, which was made of silver or copper and struck by hammering.

In 1929, the minting process was improved with more modern technology for the ½ rupee coins made of silver and the 1 paisa coins made of copper (1931).

By 1950, ½ rupee coins made of nickel were introduced into circulation, and in 1957, the naya paisa (new paisa) coins were put into circulation.

In 1966, the circulating denominations included naya paisa, 50 naya paisa, and 1 rupee coins, which were minted in cupronickel.

Bhutan's economy began to develop in the 1960s, which led to a monetary reform in 1968 and the establishment of the Bank of Bhutan.

In 1974, Bhutan introduced the Ngultrum, pegging it to the Indian Rupee at a fixed exchange rate of 100 chhetram for 1 Ngultrum. During this time, the Ministry of Finance also issued banknotes in denominations of 1, 5, 10, and 100 Ngultrum.

In 1982, the Royal Monetary Authority of Bhutan became the central bank, taking over the direct management of currency issuance from the Ministry of Finance in 1983.

Economic Role of the Bhutanese Ngultrum

The Bhutanese Ngultrum (BTN) plays a crucial role in facilitating trade and commerce throughout Bhutan, acting as the primary medium of exchange in both everyday transactions and larger economic activities. Its significance can be observed across several dimensions of daily transactions, agriculture transactions, etc.

Furthermore, the currency acts as a vital catalyst for attracting foreign investment. A stable currency, such as the Bhutanese Ngultrum, minimizes investment risks, making Bhutan an increasingly attractive destination for foreign capital.

Tourism is a key pillar of Bhutan's economy, drawing visitors eager to explore the country’s unique culture and natural beauty. In that context, the Ngultrum plays a critical role in facilitating transactions within this sector, covering everything from hotel bookings to guided tours and local crafts. 

As tourists exchange their foreign currency for Ngultrum, they use it for various expenditures, directly contributing to the local economy. The effective circulation of the Ngultrum ensures that tourism dollars remain within the country, ultimately benefiting local businesses and communities.

Bhutanese Ngultrum denominations

The Bhutanese Ngultrum is issued in two forms: banknotes and coins, with the following denominations:

Bhutanese Ngultrum Banknotes 

The Bhutanese Ngultrum banknotes are available in denominations of:

• Nu. 1 (blue with government crest and two dragons on the reserve)

• Nu. 5 (orange with government crest and two mythical bird on the reserve)

• Nu. 10 (purple with government crest and the image of Dungkar on the reserve)

• Nu. 50 (pink with government crest and the image of Khorlo on the reserve)

• Nu. 100 (green with the image of Norbu Rimpochhe)

• Nu. 500 (red with the image of orbu Rimpochhe encircled by two Dragons)

Each banknote features designs that represent Bhutan's cultural and historical heritage, including images of the King, religious Buddhist symbols, and notable architectural landmarks.

Bhutanese Ngultrum Coins

In 1974, Bhutan introduced coins in the following denominations:

• 5 chhetram and 10 chhetram made from aluminum.

• 20 chhetram made from a copper-aluminum alloy.

• 25 chhetram and 1 chhetram made from cupronickel.

In 1979, new coins were issued, including:

• 5 chhetram and 10 chhetram made from bronze.

• 25 chhetram, 50 chhetram, 1 ngultram, and 3 ngultrum made from cupronickel.

Throughout the country’s history, the 5 chhetram and 10 chhetram coins gradually disappeared from circulation. Currently, the coins in circulation include denominations of 20 chhetram, 25 chhetram, 50 chhetram, and 1 ngultram.

Factors influencing Bhutanese Ngultrum’s value

The Ngultrum is vital to Bhutan's economy, especially considering the country's reliance on India. This dependence is particularly evident in key sectors such as agriculture, hydropower, and tourism. As a result, the value of the Ngultrum is affected by a range of factors. The following are the primary influences on the exchange rate of the Bhutanese Ngultrum (BTN):

• Pegged Exchange Rate with the Indian Rupee: The Ngultrum is pegged to the Indian Rupee at a 1:1 exchange rate. Therefore, any economic fluctuations in India directly affect the value of the BTN.

• Economic Relationship with India: Bhutan heavily relies on exporting hydropower to India. As a result, any changes in trade agreements with India will influence Bhutan's trade balance and the value of the BTN.

• Bhutan's Financial Policies: The central bank of Bhutan plays a vital role in regulating the money supply and controlling inflation. It employs financial tools such as adjusting interest rates and mandatory reserve ratios to stabilize the value of the Ngultrum.

• Impact of Foreign Currency and Remittances: Foreign exchange earnings from tourism and remittances from the Bhutanese community abroad are critical. Changes in the number of tourists or the amount of remittances can significantly affect foreign exchange reserves and the value of the BTN.

• Political and Social Stability: Domestic political stability fosters confidence among investors and businesses. Conversely, political unrest, such as protests or internal issues, can negatively impact the value of the Ngultrum.

The value of the Bhutanese Ngultrum is heavily influenced by both domestic and international economic stability, particularly concerning the Indian market.