Black market prices for the kyat against the U.S. dollar and other hard currencies have soared since the military coup last February To better control the flow of foreign currency, Myanmar’s military junta has ordered all holders of foreign currency in the country – be they banks, businesses or individuals – to convert these deposits into the local currency, the kyat. In an official circular issued on April 3, the Central Bank of Myanmar said foreign exchange held by locals and local entities in Myanmar must be deposited in…
To better control the flow of foreign currency, Myanmar’s military junta has ordered all holders of foreign currency in the country – be they banks, businesses or individuals – to convert these deposits into the local currency, the kyat.
In an official notice issued on April 3, the Central Bank of Myanmar said foreign exchange held by locals and local entities in Myanmar must be deposited into accounts with licensed banks and converted into kyat “within one working day” or face legal action. Consequences according to the Foreign Exchange Control Act.
The central bank said that in the absence of special exemptions, foreign currency can only be transferred abroad through licensed foreign exchange banks and with government approval.
everyone is affected
People who earn salaries in foreign currencies – mainly expats working for international companies – are also obliged to exchange their money into kyat, a currency that is not convertible and should not be taken abroad. The same applies to export earnings.
Analysts see the move as a signal that the junta appears to be short of hard currency to repay foreign debts and buy key supplies such as oil, gas and weapons, as a series of international sanctions following a military coup on February 1, 2021 Overthrow the country’s elected government, ending the story of economic growth.
unfavorable exchange rate
According to the World Bank, as of December 2020, Myanmar’s foreign debt alone stood at about $11 billion, while its foreign exchange reserves stood at nearly $7.8 billion.
With the central bank setting the exchange rate at 1,850 kyats to the dollar, which is lower than the prevailing black market rate of about 2,200 kyats to the dollar, there are fears they will lose money, according to local media reports.
That compares with the official exchange rate of 1,386 kyats to the dollar the day before the coup, and locals fear further outbreaks when the new exchange rate takes effect.
