An order from Myanmar’s central bank that all currency held in bank accounts must be converted into local currency has worried many in the military-ruled country about potential losses.
Businesses and individuals were told in a statement published on Sunday that starting Monday they must exchange dollars and other foreign currencies for kyat within one day or face legal consequences.
Foreign currency could only be sent abroad with government approval, he said. He said more details of the rules would follow.
Myanmar’s military leaders are facing a spate of sanctions after seizing power and toppling the country’s elected government on February 1, 2021.
The foreign currency issuance order suggests authorities may be running out of currency needed to pay down debt and buy essential supplies such as oil, gas and arms.
Hard currency is also needed to pay off Myanmar’s foreign debt, which totals about $10-11 billion.
The central bank executive order instructed foreign currency account holders in Myanmar to open new accounts to convert funds into kyat (pronounced CHUHT).
People who earn foreign exchange are also supposed to convert their money into kyat, which is not a convertible currency and should not be taken out of the country.
A Kanbawza Bank official said on Tuesday that some merchants and seafarers had come to inquire about opening the required new business accounts, but most said they were “thinking about it”.
The bank employee, who spoke on condition of anonymity because he was not authorized to speak to the media, said account holders are worried about losing money as the exchange rate of 1,850 kyats per dollar set by the central bank is lower than the current one . Black market rate of 2,030 kyat per dollar.
An unauthorized exchanger consulted on Tuesday said they did not trade.
Of seven people with foreign currency accounts who were interviewed about the order, most said they had not opened any new accounts and were unaware of the consequences.
A businessman from a trading company said big companies already have such accounts and banks have converted their export earnings into kyats.
A businessman said in a Facebook post the bank sent him a box of cakes as a gift after he exchanged his currency holdings for kyat, joking that it was worth “millions of millions” and that the cakes were named “exporters.” may be. . Tears.”
After the military came to power last year, Western governments targeted sanctions against the military, military-related companies, officials and their families.
Its foreign assets were frozen as the country lost a large chunk of its tourism revenue due to the pandemic.
According to the World Bank, Myanmar’s foreign exchange reserves were nearly US$7.8 billion as of December 2020.
The military leadership has also sought to ease pressure on its foreign exchange reserves by encouraging the use of the Thai baht, Indian rupee and Chinese renminbi or yuan for border trade.
Over the past year, authorities have taken steps to halt the kyat’s depreciation against the dollar.
The government recently announced that it would reopen borders to foreign tourism in mid-April.
That could ease some of the pressure on the country’s finances, although it’s unclear how much tourism to expect at a time when experts say widespread opposition to the coup has brought the country to the brink of civil war.