Myanmar Central Bank to No Longer Set Forex Rates

December 06, 2023, 01.22 PM | Source: Reuters
Myanmar Central Bank to No Longer Set Forex Rates

CURRENCY - NAYPYIDAW. Myanmar's central bank will no longer set exchange rates for foreign currencies and will allow banks and licensed dealers to decide their own rates, state media reported on Wednesday, in a rare easing of some of its tight controls.

The report gave no reason for Tuesday's decision by the Central Bank of Myanmar (CBM) and no notice of the policy change was posted on the CBM's website. Calls to the CBM went unanswered early on Wednesday.

With Myanmar's economy in tatters in the aftermath of a 2021 coup, financial authorities have been trying to exert more control over foreign currencies to suppress demand, while cracking down on blackmarket trading, with the licenses of more than 140 non-compliant money changers revoked this year.

Under military rule, there has been a move from a managed floating exchange rate system toward reliance on administrative controls, including rules on firms to surrender foreign exchange and report currency trades.

Exporters have been required to convert dollar earnings into kyat at the official rate set by the central bank, which in August ordered ministries and local governments not to use foreign currencies for domestic transactions, to ease pressure on the kyat currency.

The World Bank in a report in June said Myanmar's economy was showing some signs of stabilisation, but was constrained by weak investment and businesses were struggling with rising costs and difficulties sourcing materials and getting access to foreign currency. 

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