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Using US dollars in MYANMAR today - Myanmar Forum
Accommodation, some entrance fee, state taxes (visas, permissions etc.) and transportation by airplane and (some) boats. Items you should be paying in your own currency: e ateries, cabs, souvenirs.......pretty much anything else. As a general principle here (I am living in Myanmar), if I am given a price in US dollars for something other than the above, I usually get the "special alien price", and I will normally leave.
Although the Federal Reserve has lifted the requirement that all your bills be in perfect working order, it is required of anyone who wants to pay your USD..........soooooooo, make sure they look as if they were issued or not!
Burma is having difficulty dampening dollar growth
The recent efforts by the Central Bank of Myanmar (CBM) to cut the use of the dollar have caused an unforeseen setback in the shape of dollar hoards and trafficking in the dollar, reminding us in good time that meeting the monetary demand of a recently opened economies is something of a study chart. Dollar have become scarce in Myanmar in recent month as Myanmar's import growth has outpaced its export growth, resulting in an 88% increase in the country's balance of payments to $4.9 billion at the end of March.
Myanmar's greenback, the Kiev, has fallen against the dollar constantly, widening the difference between the exchange rate and the informal rate. The CBM cut the amount of cash paid out per day from $10,000 to $5,000 from a former $10,000 on May 27 and called on governments to make internal payment in Kyoto.
At the same time, the Federal Reserve also imposed a largely ignored law that all intra-Cyat operations should be carried out in Myanmar to prevent the dollarization of Myanmar's financials as well. Counter takers in some domestic bankers declined to trade US dollar to clients and instead held onto them with the anticipation that the value would increase, while some merchants increased their Kyoto rates, increasing the rate of price wars.
As a result of these countermeasures, there were further monetary volatility. By the end of July, Myanmar Kyat's formal parity rose to 1,240 to the dollar, while the forex counter was at around 1,300 to the dollar, the highest since the introduction of a Managed Float system over three years ago.
On 1 April 2012, Myanmar withdrew a firm foreign currency quote and introduced a managed floated currency with the objective of bridging the gulf between formal and forecasted prices. Every day the Federal Reserve now fixes an offical interest quota by means of an auctions with 20 municipal bankers. Dealing is permitted by issuing and withdrawing 200 licenced money changers in a margin of 0.8 per cent above or below the base interest level.
In July, a CBM high-ranking officer said to Reuters that the Federal Reserve had begun to write off the Kyoto Protocol in order to move the Fed nearer the current level and reduce volatility. This step follows IMF policy advice earlier this months, which underscored the need for tightened money and fiscal policy to stabilize ex-pect.
"Greater flexibility in the benchmark interest rat, reflecting prevailing markets and closing the gulf between the benchmark interest rat and counterparty interest rises, would help curb interest and return the FX offering to the market," the FCP said in a July 1 reported. In spite of the need for interventions, comments have pointed to major topics such as the expansion of the balance of payments shortfall, which the IMF said could "pose a risk to price and international stability".
Myanmar's banks are interested in learning from Cambodia, where the dollar accounts for 90 per cent of cash in hand and 97 per cent of banks' deposit. "Your indigenous money is dying out. This is not the kind of thing we want to see happen in Myanmar," CBM Vice Gubernatorial U Set Aung said last September.
Mr. Nesbitt is Chief Editor for Myanmar at Oxford Business Group (OBG) and responsible for the creation of industry-specific research in Myanmar. Viewpoints and statements made in this paper are those of the authors and do not necessarily represent the viewpoint of Myanmar Business Today.