India Panics: Rupee Crashes To Record Low As Modi Cuts Off Banknote Exchange 6 Weeks Early
It appears the social unrest, economic collapse, and currency crisis sparked by Indian PM Modi’s decision to demonetize “corrupt” high-denomination bank-notes was not enough. As the Rupee crashed to a record low overnight, officials just announced a suspension of the exchange of ‘old notes’ as of tomorrow (instead of the original Dec 30th deadline) to, in their words, “encourage people to deposit old notes in their bank accounts.” With 60% of banknotes still un-exchanged, we suspect ‘panic’ will be the operative word in India for the next 36 hours.
Those with old notes will still be allowed to deposit them into their bank accounts until Dec. 31, but not permitted to do outright exchanges.
As Bloomberg reports, the Indian government had observed a declining trend in exchange of old notes over the counter, according to a statement from the state-run Press Information Bureau.
And so the decision to end OTC exchange of notes was to encourage people to deposit old notes in their bank accounts.
This post was published at Zero Hedge on Nov 24, 2016.