Myanmar central bank allays currency fears

21 October 2015
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Amid widespread anxiety over the impact of the Central Bank’s decision to revoke thousands of US dollar accepter and holder licences, a senior official has promised authorities have no plans to return to old ways.

For many years – until 2011, when six commercial banks opened money changers – no ordinary citizen of Myanmar was permitted to hold foreign currency.

Since then, as the country has opened up, licences have been awarded not just to banks and money changers, but to companies in many sectors including hotels, airlines and supermarkets.

However, after thousands of these licences were abruptly rescinded last week, rumours have been flying in tea shops, on social media and in local language news that non-bank money changers will also be forced to close and that people found holding US dollars will be prosecuted.

Win Thaw, deputy director general and head of the Foreign Exchange Management Department at the Central Bank of Myanmar (CBM), has sought to allay these fears, the Myanmar Times reported on Wednesday.

The central Bank has no plan to return to the government’s old policies, he told the Myanmar Times, adding that the purpose of the notice was to increase confidence in the kyat and to widen its use in the domestic economy.

“We have no intention of being retrogressive. We are trying to move toward international practices and liberalisation,” he said.

“The policy was not aimed at stemming exchange rate depreciation. We just want to make sure that the kyat plays a larger role in the domestic economy,” he said, adding that the move may indirectly result in a stronger kyat.

After weakening by around 25% this year versus the US dollar, for the first time in months the kyat has strengthened – from 1287 kyat to 1281 kyat – over the past 11 days, according to the central bank reference rate.

In the unofficial market too, the rate has strengthened versus the US dollar from 1288 kyat to 1275 kyat.

Most countries only allow the use of their own currency for domestic cash transactions, said Win Thaw. “In Thailand, for example, you can only use baht for local transactions. US dollars can be used overseas, or put into a bank account, or used for transfers,” he said.

The notification only relates to retail payments – not to individuals holding US dollars, he said.

Companies in sectors other than banking or money changing will have to give back their licences to the central bank by Nov 30.

 

Read full article here.

 

Source: Bangkok Post