Myanmar’s kyat devalues against US dollar, reaching K3,700 in grey market

Kyat against the greenback weakened to approximately K3,700 in the shady dealings although the Central Bank of Myanmar (CBM) set reference exchange rate at K2,100, the traders involved in the forex market said.
CBM has set the currency trading band at 0.3 per cent for the Kyat to fluctuate between these two specified upper and lower exchange rates for transactions, selling or buying, according to a directive issued by the CBM on 10 August 2022.
Therefore, financial institutions including the banks and informal money exchanges are instructed to set a dollar value at K2,094 for buying and K2,106 for selling. Nevertheless, the over-the-counter kyat-dollar exchange rate was K3,598 for buying and K3,688 for selling on 24 August. There is a large price difference between the reference rate of the CBM and the unofficial market rate. Yet, there is no way for the CBM to set the new price, as per the notification released in May 2023.
The exchange rate jumped to K4,000 against the US dollar on 19 August.
The CBM notified on 21 August 2023 that those holding foreign currencies without having a valid licence or permit will face legal action under the Foreign Exchange Management Law.
Under Section 9 of the Foreign Exchange Management Law, only those entities holding foreign exchange dealer licences are allowed to deal in foreign currency and travellers’ cheques.
According to the notification No 7/2014 dated 30 September 2014 issued by the Central Bank of Myanmar, stating that under Section 15 of the Foreign Exchange Management Law, domestic residents are allowed to keep US$10,000 in maximum or equivalent amount of foreign currencies for six months. If those foreign currencies that have been unused for over six months have to be exchanged in local currency at the market price through authorized dealers or deposited into bank accounts.
Those illegally holding foreign currencies will be taken action under the Foreign Exchange Management Law, the CBM warned recently. Following that notification, the foreign exchange transaction calmed down and the rate dipped to K3,700. — NN/EM