The Indian government’s decision to remove 500 and 1000 rupee notes from circulation has frozen border trade with Myanmar, where traders are concerned that some of their rupee holdings could become worthless.
Traders in the town of Tamu and Nant Hpa Lon Market in Sagaing Region said cross-border business with India had stopped completely, following Indian Prime Minister Narendra Modi’s announcement on Nov 8 that 500 and 1000 rupee notes would no longer be legal tender, the Myanmar Times reported on Wednesday.
Indian’s demonetisation policy is designed to combat corruption and fake currency, but has caused uproar as the population attempts to exchange old 500 and 1000 notes into bank deposits or smaller denominations.
Across most of Myanmar, any business deals with India are typically denominated in US dollars and conducted through bank transfers. But in border towns like Tamu, sales and purchases are all conducted in rupees.
The demonetisation policy’s impact on Myanmar border trade is two-fold. Firstly, amid the confusion over how to exchange newly illegal rupees notes and limits on withdrawals from Indian ATMs, some Indian traders have yet to finish paying Myanmar exporters for goods.