Junta eases mandatory forex conversion rule

By Admin 14 Jul 2023

DMG Newsroom
14 July 2023, Sittwe

Myanmar’s military regime has slightly eased its mandatory forex conversion rule for exporters, down from 65 percent to 50 percent.       

In April 2022, the junta-controlled Central Bank of Myanmar imposed mandatory forex conversion, saying foreign exchange earned by locals in Myanmar must be deposited in accounts at licensed banks and exchanged for kyats at an official exchange rate of 2,100 kyats per dollar. Traders were also required to convert all their export earnings for kyat.

In August that same year, it relaxed the rule, and required traders to exchange only 65 percent of their export earnings for kyat. The regime has now further reduced the amount by 15 percentage points.

“It is a good move and facilitates trade,” said trader U Toe Tet Naing from Shan State’s Taunggyi, who exports corn to Thailand.

Despite the easing of the forex conversion rule, traders are still required to convert the money at the official exchange rate of 2,100 kyats per dollar.

“Under the new rule, we only have to exchange 50 percent of our export earnings. But it is not OK for exporters to exchange at their rate,” said U Zaw Min Khine from Mandalay, who exports beans and pulses to China.

The exchange rate in the free market and at private banks currently stands at around 3,100 kyats per dollar. The difference between the official exchange rate and the market rate has, for the most part, continued to widen in the two-plus years since the military seized power in February 2021.

The secretary of the Arakan State Chamber of Commerce and Industry, U Aung Aung, said: “Fifty percent is not enough. It would be best if we could use our money freely.”

Myanmar earned nearly US$3 billion in export earnings from April 1 to June 24 of the current 2023-24 fiscal year, with trade valued at more than US$7 billion, according to the junta’s Commerce Ministry.