The Central Bank of Myanmar (CBM) has warned foreign currency exchange operators to sell foreign bank notes only within the rate set by the government, as the value of the Burmese kyat has fallen over the past week.
As of 12 May, the CBM index stood at 1,080 kyat per US dollar, while at private banks dollars were buying at 1,088 kyat and selling at 1,098 kyat. On the black market, they were buying at 1,128 kyat and selling at 1,135 kyat.
CBM Deputy-Director Win Thaw told DVB that government officials met with private exchange operators on 11 May, warning they may face legal action if their prices are not set at within 0.8 percent of the CBM rates.
“According to the Central Bank of Myanmar’s Foreign Currency Management Law, operators who violate the regulations can be punished with up to one year imprisonment or a fine, and also get their operator licenses revoked,” said Win Thaw.
A private bank official told DVB: “This can hurt us. As there is about 40 kyat difference between our price and the black markets, people are buying as much as they from us and selling it to the black markets at profit. In this situation, we won’t be able to meet market demand. We don’t have a lot of US dollars and no one is selling to us as the black markets are paying much more.”
Soe Tun of the Myanmar Rice Federation said, “When the import value is higher than export value, the country runs out of dollars. The government budget deficit may be another contributing factor for the decline in the price of kyat as it can cause inflation.”
The CBM adopted a managed float exchange rate system for the Burmese kyat on 1 April 2012, abandoning a three-decade long fixed exchange rate.