YANGON — The Central Bank of Myanmar on Wednesday announced that it will now allow the Japanese yen and Chinese yuan to be used as a settlement currency for international payments and transfers.
The move came after Chinese investors urged the Ministry for Investment and Foreign Economic Relations to reform Myanmar’s foreign currency exchange policies during the Invest Myanmar Summit 2019 in Naypyitaw on Tuesday.
In a statement, the Central Bank said the policy change aims to facilitate international payments and settlements and border trade.
It said banks authorized for foreign exchange can now open yen and yuan accounts and settle trades in those currencies. But opening personal accounts or registering legal entities in yen or yuan is still prohibited.
Since the National League for Democracy took power in early 2016, the government has moved slowly to reform the banking sector.
Since August, however, the Central Bank has made some major reforms, including dropping exchange rate limits on private banks and exchange counters in a bid to prevent currency manipulation and settle recent fluctuations in the Myanmar kyat. In November it allowed foreign banks to lend and provide other services to domestic companies in order to help exporters being limited by the services of local lenders.
“The move is only the first step in making official transitions for trading and any payments with internationally” currencies, said Saw Bo Bo, a former Citibank officer.
“If you want to transfer Chinese currency to China, you have to go to the bank and exchange it [kyat] with yuan. Then the bank will transfer the money to the receivers. Further reforms should let the people open personal accounts” in yen and yuan as well, he said.