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Myanmar central bank orders state bodies not to use foreign currencies -Breaking


© Reuters. FILEPHOTO: A stack of Myanmar kyat is seen before a customer collects it at a Yangon bank on October 19, 2015. REUTERS/Minzayar

(Reuters] – Myanmar’s central banking has instructed ministries and local governments to stop using foreign currencies in domestic transactions. This is to ease pressure on the kyat.

The economy of this Southeast Asian country has been in crisis ever since last year’s military took power. This stopped over a decade worth of economic and political reforms, and placed pressure on the exchange rate between the US dollar and the kyat.

In a Wednesday statement, Win Thaw, Deputy Central Bank Governor said that in addition to increasing foreign currency demand, the exchange rate could fluctuate because of the practice to receive and disburse foreign currency for goods or services bought within the country.

Win Thaw explained that the U.S. dollar is being used by international institutions such as restaurants, hotels and souvenir shops, and schools around the world, rather than the currency of the kyat. This includes businesses and organizations run by ministries.

“Myanmar kyat’s currency should be used in domestic payments and respective ministries, regional and state governments….should instruct your organisations as necessary,” said his statement, which was addressed to ministries and local governments.

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This latest order comes as part of an attempt by the authorities to tighten control on foreign currency flow in the military-run country.

Although the official exchange rate of the central bank for the kyat currently stands at 1,850 dollars per dollar, it has been well below that unofficial black market rate.

The central bank had previously stated that foreign currency earned in the local area must be placed at licensed banks by April 3, and then exchanged within one day for the Kyat.

This move provoked protests by residents as well as foreign business groups. The central bank then exempted foreign entities.