Myanmar junta orders all foreign currency holders to convert money into local kyat
The military government in Myanmar in an attempt to get more control over foreign currency flows has ordered all holders of foreign currency in the country – whether banks, businesses or individuals – to convert these deposits into the local currency, the kyat.
In an official notification published on April 3, the Central Bank of Myanmar said that foreign exchange held by locals and local entities in Myanmar must be deposited in accounts at licensed banks and exchanged for kyat “within one working day“ or they would face legal consequences in accordance with the foreign exchange management law.
Without a special exemption, transfers of foreign currency abroad can only be carried out via licensed foreign exchange trading banks and with government approval, the central bank said.
Everybody is affected
People who earn their salaries in foreign currency – mainly expats working for international companies – are also obliged to convert their money into kyat, a currency which is not convertible and not supposed to be taken out of the country. The same applies to export earnings.
The move is seen by analysts as a signal that the junta seems to be running short of hard currency needed to pay debts to foreign creditors and purchase key supplies such as oil, gas and weapons amid a raft of international sanctions after the military coup on February 1, 2021 that ousted the country’s elected government and put an end to an economic growth story.
Unfavourable exchange rate
Myanmar’s foreign debt alone currently stands at about $11 billion versus foreign currency reserves of nearly $7.8 billion as of December 2020, according to the World Bank.
Individuals are worried they would lose money since the exchange rate set by the central bank, 1,850 kyat per US dollar, is below the prevailing black market rate of around 2,200 kyat per US dollar, local media reported.
By comparison, the official exchange rate was 1,386 kyat for one US dollar on the day before the coup happened, and locals fear that it would further explode after the new exchange rule came into force.
[caption id="attachment_38366" align="alignleft" width="300"] The black market prices in kyat for the US dollar and other hard currencies have ballooned since the military coup in February last year[/caption] The military government in Myanmar in an attempt to get more control over foreign currency flows has ordered all holders of foreign currency in the country – whether banks, businesses or individuals – to convert these deposits into the local currency, the kyat. In an official notification published on April 3, the Central Bank of Myanmar said that foreign exchange held by locals and local entities in Myanmar must be deposited in...
The military government in Myanmar in an attempt to get more control over foreign currency flows has ordered all holders of foreign currency in the country – whether banks, businesses or individuals – to convert these deposits into the local currency, the kyat.
In an official notification published on April 3, the Central Bank of Myanmar said that foreign exchange held by locals and local entities in Myanmar must be deposited in accounts at licensed banks and exchanged for kyat “within one working day“ or they would face legal consequences in accordance with the foreign exchange management law.
Without a special exemption, transfers of foreign currency abroad can only be carried out via licensed foreign exchange trading banks and with government approval, the central bank said.
Everybody is affected
People who earn their salaries in foreign currency – mainly expats working for international companies – are also obliged to convert their money into kyat, a currency which is not convertible and not supposed to be taken out of the country. The same applies to export earnings.
The move is seen by analysts as a signal that the junta seems to be running short of hard currency needed to pay debts to foreign creditors and purchase key supplies such as oil, gas and weapons amid a raft of international sanctions after the military coup on February 1, 2021 that ousted the country’s elected government and put an end to an economic growth story.
Unfavourable exchange rate
Myanmar’s foreign debt alone currently stands at about $11 billion versus foreign currency reserves of nearly $7.8 billion as of December 2020, according to the World Bank.
Individuals are worried they would lose money since the exchange rate set by the central bank, 1,850 kyat per US dollar, is below the prevailing black market rate of around 2,200 kyat per US dollar, local media reported.
By comparison, the official exchange rate was 1,386 kyat for one US dollar on the day before the coup happened, and locals fear that it would further explode after the new exchange rule came into force.
