Myanmar central Bank orders foreign currency not to be used for domestic transactions

Myanmar's central bank has ordered ministries and local governments not to use foreign currency for domestic transactions to help relieve pressure on the kyat currency.

Since the military seized power last year, the Southeast Asian country's economy has been in crisis, halting a decade of political and economic reforms and putting pressure on the kyat's exchange rate against the US dollar.

The exchange rate may fluctuate due to the practice of receiving and disbursing foreign currency for goods and services purchased within the country, according to a statement issued on May 25 by Deputy Central Bank Governor Win Thaw, who said that hotels, restaurants, souvenir shops and international schools are using the U.S. dollar instead of the kyat, as well as businesses and organisations operated by ministries.

Myanmar kyat's currency should be used in domestic payments and the ministries, regional and state governments should instruct your organisations as necessary, he said.

The order is the latest in an effort by the military-run nation to exert more control over foreign currency flows.

The official central bank exchange rate for the kyat is currently set at 1,850 per dollar, but has tended to be well below the unofficial black market rate.

Foreign exchange earned locally must be deposited at licensed banks and exchanged for the kyat within a working day, according to the central bank.

The central bank exempted foreign entities from the rule after the move caused protests from residents and foreign business groups.