Myanmar orders foreign money held by banks changed to kyats
BANGKOK — An order by Myanmar’s central bank that all foreign currency in bank accounts must be converted into the local currency has many in the military-ruled country worried over potential losses.
Businesses and individuals were told in a notice issued Sunday that as of Monday they must convert dollars and other foreign currency into kyats within one day or face legal consequences.
Foreign currency cannot be sent overseas without approval from the government, it stated. Further details on the rules will be provided, it said.
Myanmar’s military leaders are facing a raft of sanctions after they seized power on Feb. 1, 2021, ousting the country’s elected government. The authorities were ordered to hand over foreign currency because they may not have enough hard currency to pay their debts or purchase essential supplies like oil, gas, and weapons.
Hard currency is also needed to repay foreign debt, which for Myanmar stands at about $10-$11 billion. The central bank ordered foreign currency account holders in Myanmar to open new accounts for converting funds into kyats. The central bank ordered foreign currency holders in Myanmar to convert their money into kyats (pronounced CHUHTs). Kyats are not convertible and cannot be taken out of the country.
An official from Kanbawza Bank said Tuesday that some traders and sailors had come in to inquire about opening the required new business accounts but most said they would “think about it.”
The bank staffer, who spoke on condition they not be named because they were not authorized to speak to media, said account holders were worried they would lose money since the exchange rate set by the central bank, 1,850 kyats per dollar, is below the prevailing black market rate of 2,030 kyats per dollar.
One unauthorized cash changer was consulted Tuesday and said that they weren’t doing any exchanges.
Six people with foreign currency accounts were asked about the order. They said they hadn’t opened new accounts and weren’t sure what the consequences would be. A businessman from a trading company stated that major businesses already have these accounts and that banks have been converting export earnings into kyats.
One person posted on Facebook that a bank had given him a box full of cakes after converting his foreign currency holdings into kyats. He joked that it was worth millions of dollars and that the name of these cakes was “exporters tears.” After the military took power last January, Western governments imposed targeted restrictions on the military, military-affiliated companies, officials, and their families. Their foreign assets were frozen at a time when the country was losing a large portion of its tourism earnings due to the pandemic.
Myanmar’s foreign reserves stood at nearly $7.8 billion as of December 2020, according to the World Bank. The military leadership also tried to ease pressure on its foreign reserves by encouraging the use or yuan of Thai baht and Indian rupees for trade in border regions. Authorities intervened last year to stop a decline in the value of the kyat against the dollar.
The administration recently stated that it will reopen the borders for foreign tourism in mid April. This could help ease the country’s financial pressures, but it is unclear how much tourism can possibly be expected in a country where experts claim that there has been widespread resistance to the coup.
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