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Myanmar Crisis

Myanmar to exempt foreign companies from forced currency exchanges

Central bank briefs banking officials on loosening of rule that has created uncertainty

Myanmar bank notes. The country has introduced rules requiring businesses and individuals to exchange foreign currency for kyat.

BANGKOK -- The Central Bank of Myanmar plans to exempt foreign-owned companies from forced exchanges of hard currency into local kyat, people familiar with the matter said, in a loosening of a rule that critics say risks deepening the Southeast Asian country's isolation.

Central bank policymakers informed banking officials of the exemption at a meeting Tuesday, sources said.

Such exemptions had been granted only to select companies, such as those involved in foreign direct investment approved by the Myanmar Investment Commission.

Multinationals have kept a close watch on the shifting foreign exchange rules in Myanmar, which has faced a chronic shortage of hard currency since the civilian government was ousted in February 2021. Political uncertainty and Western sanctions have slashed the country's inflows of international investment and development assistance.

Just last Friday, the central bank ordered banks to convert the equivalent of 5% of their foreign-currency holdings into kyat, a step that forced the financial institutions to accelerate the conversion of customers' foreign currency in their bank accounts.

Local branches of Japan's three leading banks began informing customers that foreign-currency deposits would need to be exchanged for kyat, only to see the central bank reverse course just a few days later.

"The explanation by the central bank on Tuesday was spoken, so we want to have a final confirmation in the form of a written notice," a source at a Japanese bank said.

In April, the central bank issued a notice requiring holders of foreign currency, including members of the public, to exchange their money for kyat.

The military-led authorities have established a foreign exchange supervisory board and imposed strict limits on withdrawing foreign currency from banks and sending it abroad.

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