Understanding Central Bank Myanmar Currency Exchange Rate and Rules

The Central Bank of Myanmar plays a crucial role in regulating the country's currency exchange rate. The exchange rate is determined by the supply and demand of the kyat in the foreign exchange market.

The Central Bank of Myanmar sets the reference rate, which is the rate at which banks are allowed to buy and sell foreign currencies. The reference rate is updated daily and serves as a benchmark for the exchange rate.

The exchange rate can fluctuate due to various economic factors, such as inflation, interest rates, and trade balances. The Central Bank of Myanmar also intervenes in the foreign exchange market to stabilize the exchange rate and maintain economic stability.

To exchange currency, individuals and businesses must follow specific rules set by the Central Bank of Myanmar. These rules include the requirement for banks to report all foreign exchange transactions to the Central Bank.

The Kyat-dollar exchange rate has been making headlines in Myanmar, and it's essential to understand the current situation.

As of February 7, the exchange rate dipped to K3,500 in the over-the-counter market, a slowdown from the K3,560 mark at the end of January.

The Central Bank of Myanmar (CBM) intervened in the currency market by injecting dollars into the financial market to stabilize the rate.

In January 2024, the CBM sold $68.33 million, 313.5 million Thai baht, and 4.2 million Chinese yuan.

The reference exchange rate of the Central Bank of Myanmar is K2,100.

Authorized dealers, or private banks, are now allowed to operate forex exchanges freely, as per the market rate determined by supply and demand.

Outward remittance must comply with the rules and regulations of the Foreign Exchange Management Committee.

The dollar gained to around K4,000 on 19 August 2023.

Only entities holding foreign exchange dealer licenses can deal in foreign currency and traveller's cheques, and those without valid licenses will face legal actions.

Domestic residents are allowed to keep a maximum of $10,000 or equivalent foreign currencies for six months, according to Notification 7/2014.

Myanmar's Central Bank has made significant changes to currency exchange rules, affecting both online platforms and exporters.

Authorized dealer licensed banks can now freely transact in foreign currency trades, buying and selling at market exchange rates set by buyers and sellers through online platforms.

Offshore remittances, however, must still comply with the remittance criteria set by the Foreign Exchange Supervisory Committee.

The Central Bank of Myanmar has also lowered the percentage of Myanmar companies' export earnings in foreign currency subject to mandatory conversion into MMK from 50% to 35%.

This change aims to combat "dollarisation", which has led to an increased need for dollars, weakening the 'Kyat' and causing exchange rate instability.

The current official exchange rate set by the CBM is USD 1 to MMK 2,100.

In Myanmar, the use of foreign currency, particularly the US dollar, is a common practice. This phenomenon is known as dollarisation.

The country's central bank has revoked special licenses to combat dollarisation, which is causing exchange rate instability. The need for dollars is increasing due to payments and sales in dollars.

With an exchange rate of over 1,200 kyat to one dollar, larger cash transactions require a lot of bank notes if not conducted in US dollars.

Myanmar has relaxed its online currency rules, allowing market exchange rates for online platforms. This change was announced by the Central Bank of Myanmar (CBM) on December 5, 2023.

Authorized dealer licensed banks (ADLBs) can now freely transact in foreign currency trades at market exchange rates set by buyers and sellers through online trading platforms. Offshore remittances must still comply with the Foreign Exchange Supervisory Committee's criteria.

The online trading platform Refinitiv, initiated in June 2022, facilitates buying and selling of foreign currency between ADLBs and between banks and customers. The exchange rate was initially set at over MMK 2,900 per USD 1.

In August 2023, the CBM ordered banks and traders to limit foreign exchange transactions to an approved online trading platform, with the exchange rate fixed at MMK 2,900 per USD 1. Transactions outside of online trading platforms are still governed by the exchange rate set by the CBM of 2,100 MMK per USD 1.

The CBM has also relaxed conversion rules for exporters, lowering the percentage of Myanmar companies' export earnings in foreign currency subject to mandatory conversion into MMK from 50% to 35%. This change was announced on December 6, 2023.

The Kyat value has been fluctuating in the market, with the Kyat-dollar exchange rate dipping to K3,500 in the over-the-counter market on 7 February.

This decline is a slowdown from the previous rate of K3,560 at the end of January. The Central Bank of Myanmar (CBM) intervened in the currency market by injecting dollars into the financial market to steer the dollar gains in the forex market.

The CBM sold a total of $29 million and 250 million Thai Baht on an online trading platform within five days, which includes $13 million on 1 February, $5 million and 50 million Thai Baht on 2 February, and $11 million and 200 million Thai Baht on 5 February.

The reference exchange rate of the Central Bank of Myanmar is K2,100, which is a significant difference from the market rate of K3,500.

Domestic residents are allowed to keep a maximum of US$10,000 or equivalent amount of foreign currencies for six months, according to Notification 7/2014 dated 30 September 2014.