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Five government approved banks in Burma will be allowed to operate foreign currency exchange bureaus by the end of this month following decades of strict rules surrounding the flow of overseas money in the country.
The government’s deputy minister of finance and revenue, Win Than, who made the announcement in a press conference, named the banks as Innwa Bank, Myanmar Oriental Bank, Kanbawza Bank, Cooperatives Bank and Myawaddy Bank, the last of which is controlled by the military.
They are all party to the new Foreign Currency Exchange Department, which is due to open on 28 September. Staff at the Myawaddy Bank are reportedly undergoing training, an employee told DVB.
A government official confirmed to Reuters that, “It has been decided to allow five private banks to open ‘Money Changer Counters’ in Yangon [Rangoon] to buy, sell and change foreign currencies mainly the euro, dollars and FEC [Foreign Exchange Certificates] to begin with.”
Details on the amount of money the banks will be allowed to exchange and what kind of documents they need are still not clear.
Economist Zaw Oo said that few people seemed to know the specifics surrounding the agreement, but that it was rumoured the banks would trade foreign currency at market rates. Speculation that they would trade at market prices was also voiced by economist Aung Thu Nyein.
Strict rules surround the use of foreign currency in Burma, with hefty penalties for those who fail to declare money when entering the country.
The local currency, the kyat, has been struck with an unusual trend of appreciation that has made it the best performing currency in Asia this year. According to chief government economic adviser, U Myint, its value has risen by 20 to 25 percent.
This has sparked inevitable havoc in the export sector, although U Myint said in a presentation to the government in Naypyidaw last month that the turbulence presented a good “opportunity” to reform the country’s multiple exchange rates.
He said the aim was to “establish a foreign exchange market in Myanmar [Burma] that meets international standards where the exchange rate is relatively stable, is market-determined, and becomes a useful tool of macroeconomic management for the Central Bank of Myanmar.”
The government is now awaiting a team of technical experts from the International Monetary Fund late next month who will advise on currency reform. The issue remains one of the government’s prime challenges, with control of the economy limited when currency exchange remains on the black market.
Additional reporting by Joseph Allchin