6-12-2023 (YANGON) Myanmar’s central bank has announced that it will no longer be responsible for setting exchange rates for foreign currencies. Instead, banks and licensed dealers will have the authority to determine their own rates. This decision marks a rare easing of the country’s tight controls on currency.
The Central Bank of Myanmar (CBM) made the announcement on Tuesday, but no specific reason was given for the policy change. As of now, there has been no notice posted on the CBM’s website regarding this development, and calls to the bank went unanswered.
Myanmar’s economy has been in a state of turmoil since the 2021 coup, and the country’s financial authorities have been attempting to exert more control over foreign currencies to curb demand. Additionally, they have been cracking down on black market trading, revoking the licenses of over 140 non-compliant money changers this year.
Under military rule, Myanmar had been moving away from a managed floating exchange rate system and relying more on administrative controls. This involved implementing rules for firms to surrender foreign exchange and report currency trades. Furthermore, exporters were required to convert their dollar earnings into kyat at the official rate set by the central bank. In August, the central bank issued an order to ministries and local governments, prohibiting the use of foreign currencies for domestic transactions, in an effort to alleviate pressure on the kyat currency.
A report by the World Bank in June noted that Myanmar’s economy was displaying some signs of stabilization, but was still constrained by low investment and businesses facing challenges such as rising costs and difficulties in sourcing materials and accessing foreign currency.
