According to some analysts, the sliding dollar could hurt Bhutan's exports but it would also make debt servicing on loans easier for the government. Some Bhutanese in the fruit export business are worried with the apple export season two months away.
At a macro economic level the appreciating Ngultrum is not expected to have much of an impact on both exports and imports because Bhutan's largest trading partner is India and trading between the two countries hardly involved hard currency. However, the Ngultrum's gain against the US dollar has more to do with India's economy which has seen unprecedented growth in the past few years particularly in the IT sector and huge inflows of investment capital. The Ngultrum is pegged at par to the Indian Rupee and follows the changes in its exchange rate. So any gain in the Rupee brings about a gain in the Ngultrum against the dollar. In 2005, 87.6 percent of Bhutan's exports were to India. Of the total imports 75.1 percent were from India. The appreciating Rupee against the dollar has raised a lot of concern in India where inflation has risen beyond five percent and some economists have warned of the economy over heating. According to a news report in the Times of India the commerce minister, Kamal Nath, had requested PM Manmohan Singh to intervene on the appreciating Rupee. The concern has been centred around the impact of the appreciating value of the Rupee on Indian exporters. According to the report the Rupee has touched a nine-year high of Rs 40.55 to a dollar on Monday and exporters have seen their margins erode by 10 percent in the past year. Besides the Rupee and Ngultrum, most major currencies of the world have also been moving up against the weakening dollar, particularly the Euro and the Thai Baht.
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