Thailand currency

Myanmar central bank says foreign currency deposits must be converted into local currency

People line up outside a bank to withdraw cash in Yangon on May 13, 2021. (Photo Reuters)

Foreign currency earned by Myanmar residents must be deposited in accounts at licensed banks and exchanged for local currency within one business day, the central bank has said, as the country’s military authorities seek better control the flow of foreign currency.

In a notification dated April 3 and published in state media on Monday, the central bank said it would grant exemptions to the new rule separately and that foreign currency transferred overseas should be done through banks in authorized exchange.

The order, signed by Myanmar Central Bank Governor Than Nyein, would also apply to foreign currency entering the country before Sunday, according to the notification. He said those who fail to comply will face legal action under the Foreign Exchange Management Act.

Myanmar’s economy has collapsed since the military toppled an elected government more than a year ago and launched a bloody crackdown on opponents, with a struggle to impose order amid civil unrest widespread and armed resistance from pro-democracy militias and ethnic minority rebels.

Last year, the central bank briefly attempted to peg the kyat currency to a benchmark rate against the dollar after the exchange rate fell.

In March, Myanmar authorities announced a plan to start accepting the Thai baht for settlement of cross-border trade transactions to reduce dependence on the dollar and reduce inflationary pressures.

The announcement, issued by the Ministries of Information and Investment, also indicated that there was a similar plan to use the Indian rupee for such trade after an earlier agreement to accept the Chinese renminbi.

The central bank’s latest order has sparked questions in a social media group used by Myanmar residents to facilitate currency trading, about whether money converted into kyat would be placed in special accounts and whether it was possible to access.

A Myanmar resident, who asked not to be named for security reasons, expressed concern about the ability to access his deposited savings and the amount that could be withdrawn.

“If we can’t withdraw, whatever we earn will be stuck in the bank,” the resident said.

The official central bank exchange rate for the kyat is currently 1,850 to the dollar, but it is usually much lower than the unofficial black market rate.

A central bank spokesman did not immediately respond to a request for comment.