Myanmar’s Central Bank has announced that all foreign currency accounts held in the country’s banks must be exchanged for kyat within one business day, and all foreign currency earned by locals must be exchanged for kyat. local currency.
The order, dated April 3rd, said those who fail to comply will be charged under the Foreign Exchange Management Act. The notice, however, indicated that the exemptions would be announced at a later date.
Since the overthrow of the civilian government by the military last year, Myanmar’s economy has suffered.
There have been cash shortages, sharp increases in commodity prices and the plummeting value of the Myanmar kyat.
The Central Bank also used methods of accepting foreign currencies, such as yuan and baht, for cross-border trade transactions and pegged the kyat rate to a rigid benchmark rate.
While official rates fluctuate between MMK 1,750 and 1,850 per US dollar, black market rates hover around 2,100. Private banks, which provide services that require the use of dollars, also do not respect strictly the rate set by the Central Bank.
According to Mr. S, an expert in the financial sector, this will place a huge burden on the middle class, a demographic group which he believes will slowly but surely leave the country.
“It was slowly coming to this point, but if things are this restricted it is going to be a huge success. It lights a fuse for a huge change that will happen in maybe two years.
“We could start seeing the adverse effects in three months,” he said.
Many people online question the rationale for such a hasty decision and the lack of details on whether or not to access foreign currency accounts, forcibly changed to Kyat, as there are still restrictions on withdrawals from different types of bank accounts.
Mr. Z, a businessman, said he was wary of such moves and was therefore now prepared for them.
“All payments, to find my materials, go through my Thai bank account, so it’s not a problem for me, as long as I can transfer to my Thai account,” he said.
There has yet to be a follow-up statement from the exchange order or from any Central Bank official speaking to the media regarding this decision.