200 Ngultrums – Bhutan

In 2020, Bhutan's currency situation was primarily defined by the pressures of the COVID-19 pandemic, which severely impacted the two pillars of its economy: tourism and hydropower exports. The country closed its borders in March 2020, causing tourism—a critical source of foreign currency earnings—to collapse entirely. Simultaneously, delays in completing major hydropower projects and disruptions to trade with India, which accounts for the vast majority of Bhutan's imports and exports, strained foreign exchange reserves. The Ngultrum (BTN), which is pegged at par to the Indian Rupee (INR), remained stable due to this fixed exchange rate regime, but the underlying economic vulnerabilities were sharply exposed.

The government and the Royal Monetary Authority (RMA) responded with a suite of measures to conserve foreign currency and support the economy. These included restricting the import of non-essential goods, such as vehicles, to curb outflows of Indian Rupees. The RMA also implemented monetary policy actions, including lowering the Counter Cyclical Capital Buffer and reducing the Risk Weight on housing loans, to inject liquidity into the financial system. Furthermore, Bhutan sought and secured emergency financial assistance, including a USD 43 million loan from the IMF's Rapid Credit Facility in April 2020, to bolster its external position and finance essential healthcare and social spending.

Overall, while the peg to the Indian Rupee provided monetary stability and prevented a currency crisis, 2020 highlighted Bhutan's economic fragility. The year underscored the nation's acute dependence on a few key sectors and its vulnerability to external shocks. The focus shifted decisively to managing a sharp economic contraction, preserving critical foreign exchange reserves, and laying the groundwork for a recovery that would depend on the eventual reopening of borders and the revival of key export sectors.