Myanmar Orders Foreign Currency Held By Banks To Be Changed To Kyats ::

— An order from Myanmar’s central bank that all foreign currency in bank accounts must be converted to local currency has many people in the military-ruled country worried about potential losses.

Businesses and individuals were told in a notice issued on Sunday that from Monday they must convert dollars and other foreign currencies into kyats within a day or face legal consequences.

Foreign currency can only be sent abroad with government approval, he said. He said further details on the rules would follow.

Myanmar’s military leaders are facing a series of sanctions after taking power on February 1, 2021, toppling the country’s elected government. The order to hand over foreign currency suggests authorities may run out of hard currency needed to pay debts and buy essential supplies such as oil, gas and weapons.

Hard currency is also needed to pay off foreign debt, which for Myanmar amounts to around $10-11 billion.

The central bank order directed holders of foreign currency accounts in Myanmar to open new accounts to convert funds into kyat (pronounced CHUHT). People who earn foreign currency are also expected to convert their money into kyats, which are not a convertible currency and are not expected to leave the country.

A Kanbawza Bank official said on Tuesday that some traders and sailors had come to inquire about opening the required new trade accounts, but most said they would “think about it”.

The bank staff member, who spoke on the condition of not being named because he was not authorized to speak to the media, said account holders feared losing money as the exchange rate set by the central bank, 1,850 kyats per dollar, is lower than the prevailing rate. black market rate of 2,030 kyats per dollar.

An unauthorized money changer consulted on Tuesday said it was not making any exchanges.

Of seven people with foreign currency accounts asked about the order, most said they had not opened new accounts and were unsure of the consequences.

A businessman from a trading company said that big companies already have such accounts and banks are converting their export earnings into kyats.

A businessman said in a Facebook post that the bank sent him a box of cakes as a gift after converting his currency holdings into kyats, joking that he was worth “millions of millions” and that the name of the cakes was “exporters”. tears.”

After the military took over last year, Western governments imposed targeted sanctions on the military, military affiliates, officials and their families. Their foreign assets were frozen, at a time when the country had lost a large part of tourism income due to the pandemic.

Myanmar’s foreign exchange reserves stood at nearly $7.8 billion as of December 2020, according to the World Bank.

The military leadership has also sought to relieve pressure on its foreign exchange reserves by encouraging the use of the Thai baht, Indian rupee and Chinese renminbi, or yuan, for trade in border areas. Last year, the authorities took steps to stem the fall in the value of the kyat against the dollar.

The administration recently announced plans to reopen the borders to foreign tourism in mid-April. This could ease the pressure on the country’s finances somewhat, although it is unclear how much tourism can be expected at a time when experts say widespread resistance to the coup has left the country on the brink of civil war.

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