The Central Bank of Myanmar is urging government organizations to only use kyat payments to reduce US dollar demand and prevent dollarization of the economy. As per a report published in Myanmar Times, the Foreign Exchange Management Department of the bank last week announced that the only kyat should be used in domestic payments at national, regional and state-level organizations. The document aiming to prevent widespread government use of the dollar was one of several measures put out by the central bank on May 29.
A separate document also limited US dollar withdrawals from a domestic bank account to $ 10,000 a week for all people or institutions except for a few bodies such as international NGOs, embassies and United Nations organizations. The kyat has lost about 6% against the dollar so far this year, according to the bank’s official reference rate. If the market rate is used for calculations, the depreciation of the kyat is closer to 10%. Several different government departments have been known to demand payments in US dollars from local companies.
Sailors or car importers must often make their tax payments to government accounts in US dollars rather than kyat, for instance. While government use of the greenback has been tapering off from 2011, many hotels, restaurants and jewelry shops still list their prices in US dollars. Business people say it is important to preserve use of the US dollar at private businesses. Some shop owners find the use of kyat inconvenient as when transactions get expensive a large mass of notes is required. Some other businesses prefer kyat payments, but have to give in to customer demand.