– This is the script of CNBC's news report for China's CCTV on November 14, Monday.
Welcome to CNBC Business Daily, I'm Qian Chen.
Indian Prime Minister Narendra Modi last Tuesday announced that 500 and 1,000 rupee banknotes would be withdrawn from circulation at midnight, saying it was part of a crackdown on rampant corruption and counterfeit currency.
Indians struggled to pay for basic goods like food and fuel on Wednesday and fretted about their savings, after the government withdrew 500 and 1,000 rupee notes from circulation in a bid to flush out money hidden from the tax man.
India's National Stock Exchange share index slumped as much as 6.3 percent in early trade before recovering most losses to close the day off 1.3 percent. The index fell by almost 3 percent last week since the new policy was annouced.
The currency move, announced late on Tuesday night by Prime Minister Narendra Modi, aims to bring billions of dollars worth of unaccounted wealth into the mainstream economy and curb corruption.
Indians raced to turn their cash into gold, which jumped nearly 4 percent to its strongest in more than five weeks as investors sought safety following Trump's unlikely win.
India is the world's second largest gold consumer and around a third of its demand comes from the unaccounted sector.
On Tuesday night, jewelers in Mumbai kept shops open until midnight as panicked people rushed to buy gold with cash, said Kumar Jain, vice president ofthe Mumbai Jewellers Association.
Gold premiums in India jumped to their highest in 21 months, as demand surged after the government abolished two high-value currency notes, while bargain hunting propped up demand and premiums in leading consumer China.
From midnight, the larger bank notes ceased to be legal tender for transactions other than exchanging them at banks for smaller notes.
India's "black economy," a term widely used to describe transactions that take place outside formal channels, amounted to around 20 percent of gross domestic product, according to investment firm Ambit.
New bills of 500 and 2,000 rupees will be introduced from Nov. 10. Jaitley said it would take two to three weeks to replace the old notes, amid concerns over the availability of cash.
The biggest disruption in decades to cash transactions, which power much of the rural economy, comes months before a series of state elections including in India's most populous Uttar Pradesh state.
Critics have warned that ordinary people who do not have access to the banking system will be hardest hit, and that Modi risks upsetting his ruling party's support base of small traders and businessmen who largely deal in cash.
It will also affect politicians running for office in a country where there is no state financing for elections and many campaigns are funded by unaccounted wealth.
Modi, however, came to office in 2014 promising a war against the shadow economy that won him support from middle-class Indians who accuse elite politicians and businessmen of cheating the system.
It could also lead to easing inflation, raising the prospect of additional rate cuts from the central bank, which lowered the key repo rate by 25 basis points last month.
CNBC Qian Chen, reporting from Singapore.