Myanmar: Officials weakening domestic currency against the US dollar as of Aug. 11

Event

The Myanmar military government has weakened the domestic kyat-US dollar exchange rate as of Aug. 11. Officials also require export companies to convert 65-percent of foreign currency to kyats. Export companies have 30 days to use the remaining foreign currency to purchase imported goods or make other cross-border payments. Authorities may take legal action against companies that fail to comply with these measures. The government is implementing the policies to incentivize exporters to conduct business through legal means. However, the new exchange rate has resulted in cross-border trade disruptions; some traders, including those on the Myanmar-Thailand border, have stopped imports due to making losses. Online shops that rely on cross-border trade have also stopped selling products.

Cross-border business disruptions will likely continue until further notice. Rallies against the regulation are possible. Increased security and localized transport and business disruptions are likely near any protests. Clashes are possible if security personnel attempt to disperse any gatherings forcibly.

Context

The policy is related to the foreign currency reserves shortage in Myanmar due to international sanctions against the junta following the February 2021 military coup. The regime's past related measures include requiring companies and individuals to exchange foreign currency earnings into the local currency within one working day at licensed banks at the official rate with limited exceptions, as well as ordering companies and individuals to suspend or reschedule foreign loan repayments.

Advice

Plan for business disruptions. Avoid any demonstrations as a precaution. Heed all official instructions.