The local import and export industry is being harmed by new currency control measures that require banks to convert any foreign currency into Myanmar kyat within a day of receiving the foreign currency.
The control measures, which were purchased on April 4 by the Central Bank, order banks holding an authorized dealer license to convert any foreign currency their account holders receive (including US dollars) into Myanmar kyats. within one business day after deposit of the foreign currency. because the holding of foreign currency is now prohibited.
But, while the current exchange rate is over 2,000 kyats per US dollar, the ordinance states that any dollar deposited must be converted at the rate of 1,850 kyats per dollar. This was done because the military junta needs US dollars to finance itself.
This applies to all bank accounts. There will be further announcements if the official exchange rate changes from 1,850 kyat to the dollar.
This artificially low currency conversion rate would mean that Myanmar Airways International (MAI) cargo flights would operate at a loss, so the company had to suspend that part of its operations. Representatives of the MAI and the Central Bank have started negotiations on the subject.
“Logistics companies are also facing difficulties due to the closure of cargo flights. If cargo planes are permanently stopped, most people [in the industry] will lose their jobs,” a person working in the logistics sector told Mizzima.
“If the exchange rate goes to 1,850 kyats, the MAI logistics service will not be profitable and they will have to close their cargo flights. Our small import/export logistics service will also stop. However, some cargo is loaded onto passenger flights and relief flights. However, because the junta allowed people to travel [by air] again, places are full until April 26 [leaving less room in the hold for cargo].”
According to a statement from the Central Bank of Myanmar, purchases made with foreign currencies, such as payments for imports, services, foreign investments, repayment of foreign loans and interest payments, will need to be authorized by the Exchange Supervisory Committee before they can be made.
According to an April 8 Associated Press article, these new rules affect foreign business organizations in Myanmar. The new rules will reduce foreign investment, force businesses to close and lower Myanmar’s already low standard of living, according to a joint statement released by US, UK, French, Australian and other business associations.
Myanmar Central Bank Vice President Than Than Swe was shot dead at her home in Bahan Township, Yangon on April 7, shortly after the dollar exchange order came into effect.