Junta eases compulsory conversion rules for export earnings amid currency crunch

Myanmar’s military regime has reduced the portion of earnings from foreign commerce that traders are required to convert to Myanmar kyat from 25 to 15 percent this month, according to the regime-run Central Bank of Myanmar (CBM). Military authorities have limited exporters’ free use of foreign currency-denominated proceeds from trade, instead requiring them to sell a portion of their foreign currency to the CBM for kyat at far below the market exchange rate. The previous rules set the portion at 25 percent, with the exchange rate set at 2,100 kyat per United States dollar. Under the junta’s new directive, the portion of foreign currency required to be exchanged is 15 percent. However, the remaining 85 percent still has to be converted on the CBM’s online trading platform at 3,500 kyat to the dollar, still significantly below the market rate of around 4,000 kyat to the dollar. A Mandalay-based exporter said the change would provide little relief and that traders would still incur major losses by following the new rules. “Merchants have been under heavy pressure. When the market rate is around 3,900 kyat but we are forced to sell at 2,100, the losses are huge,” he said. However, he acknowledged that it was likely the regime’s changes would marginally boost foreign trade. “This adjustment makes it only a little easier to export more,” he said. “It also appears the authorities want to issue more import licences.” Other exporters agreed that their profit margins would continue to suffer as long as the regime kept any requirements in place to exchange export earnings at the rate set by the CBM. Seeking to mitigate a chronic scarcity of foreign currency in the CBM’s reserves, the junta has imposed sweeping controls on its use since the military seized power in Myanmar in 2021. In addition to the exchange requirement on export earnings, authorities have limited the issuing of licences for imports that require an outflow of foreign currency, leading to shortages of essential imports such as medicines. Junta chief Senior General Min Aung Hlaing has repeatedly defended the currency controls as sound and necessary. Despite his assurances that there would be tax relief and a better business environment under his leadership—for example, at a meeting of the country’s federation of chambers of commerce and industry in November of last year—the junta-controlled CBM and other authorities have repeatedly penalised companies accused of failing to repatriate the required share of their export earnings. The junta’s punitive measures include blacklisting allegedly noncompliant businesses and barring their executives from foreign travel. Exporters are not alone in facing pressure. The junta has also demanded that overseas employment agencies force migrant workers to repatriate their wages, according to industry sources.

Junta eases compulsory conversion rules for export earnings amid currency crunch

Traders say the junta’s lightened exchange requirements, imposed to replenish the junta’s scarce foreign currency reserves, offered little relief for their struggling businesses

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