Myanmar c.bank orders state organs not to use foreign currency

May 26 (Reuters) – Myanmar’s central bank has ordered ministries and local governments not to use foreign currency for domestic transactions, to ease pressure on the kyat currency.

The Southeast Asian nation’s economy has been in crisis since the military took power last year, ending a decade of political and economic reforms and increasing pressure on the exchange rate kyat against the US dollar.

“In addition to the growing demand for foreign currency, the exchange rate may fluctuate due to the practice of receiving and disbursing foreign currency for goods and services purchased domestically,” the deputy governor of the country said. Central Bank, Win Thaw, in a statement released Wednesday.

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Win Thaw said that currently organizations such as hotels, restaurants, gift shops and international schools use US dollars rather than kyat, but also businesses and organizations run by government departments.

“Myanmar kyat currency should be used in national payments and respective ministries, regional and state governments … should instruct your organizations if necessary,” said his statement, which was addressed to ministries and to local governments.

The order is the latest in an effort by authorities to exert greater control over the flow of foreign currency into the military-ruled country.

The official central bank exchange rate for the kyat is currently set at 1,850 to the dollar, but has tended to be well below the unofficial black market rate.

The central bank previously said that from April 3, foreign currency earned locally must be deposited in licensed banks and exchanged for kyat within one business day.

The move drew protests from residents and foreign business groups, as the central bank later exempted foreign entities from the rule.

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Reporting by Reuters staff Writing by Ed Davies Editing by Martin Petty

Our standards: The Thomson Reuters Trust Principles.

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