Central Bank Denies Huge Dollar Purchase Made to Benefit Local Banks

By Myo Pa Pa San 11 December 2018

YANGON—The Central Bank of Myanmar has denied claims that its purchase of more than US$30 million from local private banks last week, at a time when the currency was weak, was made specifically in order to benefit the lenders.

“The greenback weakened steeply that day [Dec. 4]. Media reports claimed that the central bank bought U.S. dollars fearing that it would weaken. That is wrong. Secondly, the accusation that we intentionally bought U.S. dollars to benefit banks is totally inaccurate,” Central Bank of Myanmar vice governor U Soe Thein said on Monday at the Myanmar Banks Association in Yangon.

The exchange rate was 1 dollar to 1,545 kyats on the morning of Dec. 4, but the dollar had weakened to 1,490 kyats by that evening.

The central bank then bought dollars from private banks, causing the kyat to slump against the dollar again.

At that time, private banks bought U.S. dollars for between 1,500 and 1,515 kyats per dollar from outside dealers and sold them to the central bank for 1,570 kyats.

Local private banks made billions of kyats in a single day thanks to the Central Bank’s decision to buy millions of US dollars from them, critics said.

U Soe Thein said it was normal procedure for the central bank to intervene in the market to cushion the blow.

“Not every decision can be right. It depends on one’s point of view,” he said about the bank’s move.

“We have to try to make a better decision, and make the market more transparent. We also have to bear in mind that our objective is to make a profit,” he said.

On Monday, the central bank’s reference exchange rate was 1,561 kyats to the dollar, while the buying and selling prices in the market were 1,552 kyats and 1,542 kyats respectively.