The local import and export industry is being harmed by new currency control measures that makes banks convert any foreign currency into Myanmar kyats within one day of receiving the foreign currency.
The control measures, that were bought in on 4 April by the Central Bank, instruct banks that hold Authorized Dealer license to convert any foreign currency their account holders receive (including US dollars) into Myanmar Kyats within one working day of the foreign currency being deposited because holding foreign currency is now prohibited.
But, while the current exchange rate is over 2000 kyats to one US dollar, the order stipulates that any deposited dollars must be converted at the rate of 1850 kyats to a dollar. This has been done because the military junta needs US dollars to fund itself.
This applies to all bank accounts. There will be further announcements if the official exchange rate changes from 1,850 kyats to the dollar.
This artificially low currency conversion rate would mean that Myanmar Airways International (MAI) cargo flights would run at a loss, so the company has had suspend that part of its business. Representatives from MAI and the Central Bank have entered into negotiations over the topic.
“Logistics businesses also face difficulties due to cargo flights shutting down. If cargo aircraft are permanently shut down, most people [in the industry] will lose their jobs”, a person working in the logistics industry said to Mizzima.
“If the exchange rate changes to 1,850 kyats the MAI logistics service will not be profitable and they will have to shut down their cargo flights. Our small import/export logistics service will also stop. However, some goods are being loaded onto passenger flights and relief flights. Howecver, because the junta has allowed people to travel [by air] again seats are fully booked until 26 April [leaving less room in the hold for cargo].”
According to a statement by the Central Bank of Myanmar purchases made with foreign currency, such as payments for imports, services, foreign investments, repayment of foreign loans and interest payments will need permission from the Foreign Exchange Supervisory Committee before they can be carried out.
According to 8 April article by Associated Press these new rules have concerned foreign business organizations in Myanmar. The new rules will reduce foreign investment, force businesses to shut down and lower Myanmar’s already low standard of living, according to a joint statement issued by American, British, French, Australian and other commerce associations.
The vice-chairman of the Central Bank of Myanmar, Than Than Swe, was shot dead at her home in Bahan Township, Yangon, on 7 April, shortly after the dollar exchange order came into effect.
