Myanmar will begin a managed float of its currency, the kyat, from April 1, the central bank said in a statement published in an official newspaper on Wednesday.
Separately, a senior government energy official told a conference in Myanmar’s commercial capital, Yangon, that the country was moving to a unified exchange rate, in place of the multiple rates applied now.
“We are now using 800 kyat per US dollar for the time being. Starting from April, there will be more exchange rate modifications to come,” said Htin Aung, director general of the Ministry of Energy’s Energy Planning Department.
That level is close to the current black market rate, which covers most transactions, and as a result some analysts say the impact around the country may be limited.
However, the new rate will be a shock to those state companies and agencies that use the current official rate, pegged at around 6.4 to the dollar.
Two officials with private Myanmar banks told Reuters on the sidelines of an industry event in Kuala Lumpur on March 20 that the new managed float would involve a trading band that allowed fluctuations of up to 2% either side of a reference rate.
They said the new exchange rate would be around 820 kyat.
The government has worked out the national budget using a rate of 800 kyat, a central bank official has said.
The official said the new float would involve 11 private banks sending in sealed bids for a certain amount of dollars each day.
The rate would be set through supply and demand in the currency market, the central bank statement, posted in the state-run New Light of Myanmar newspaper, said on Wednesday.
The kyat’s unofficial rate has jumped from more than 1,000 per dollar in 2009 as foreign money has flowed into the timber, energy and gem sectors. That has hurt many in Myanmar, from farmers and manufacturers to traders and employees of foreign firms paid in dollars.