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Myanmar revokes foreign company exemption from currency rules

International Businesses Need To Convert Deposits Into Kyat, Central Bank Says

A bank employee ties stacks of kyat together in Yangon. The Myanmar currency has weakened since the military took control of the country in 2021, now trading for around 2,190 to the dollar on the street.   © Reuters

BANGKOK --The Central Bank of Myanmar on Wednesday reversed its position on exempting foreign companies from forced exchanges of currency to the local kyat, several sources at the bank said.

The central bank in April had instructed financial institutions to convert foreign currency earned by its customers into kyat within one business day. Existing foreign-currency deposits were also to be converted into the kyat in stages.

In mid-June, the bank issued a notice exempting companies that are 10% or more owned by overseas entities, which applied to the majority of foreign companies doing business in Myanmar. It has now rescinded this exception in a new notice, sources said.

Companies making investments approved by the Myanmar Investment Commission, as well those operating in special economic zones, are expected to remain exempt.

The currency exchange rule comes as Myanmar suffers a serious shortage of foreign currency following its military takeover in February 2021. The government established the Foreign Exchange Supervisory Committee in April, which now must approve any conversions from kyat to a foreign currency, or money transfers abroad. Foreign currency from the forced conversions will be used to repay foreign debt flagged as a priority by the FESC.

Myanmar's currency is weakening as well. Though the central bank set the official exchange rate at 1,850 kyat to the dollar in April, the street rate is currently around 2,190 kyat to the greenback -- a major change from the pre-takeover rate of around 1,330 kyat to the dollar.