Five Traders Arrested in Currency Manipulation Crackdown

By Htet Naing Zaw 1 October 2018

NAYPYITAW – The Bureau of Special Investigation (BSI) has detained five currency and gold dealers in Yangon as part of its ongoing investigation into alleged currency manipulation, the agency said Monday.

The suspects will face legal action, according to officials at the bureau, which is under the supervision of the Home Affairs Ministry.

The BSI has been investigating the detainees and will open legal cases against them soon, its director-general, U Maung Maung Kyaw, told The Irrawaddy on Monday.

“They were trying to manipulate the market by making ‘hollow’ transactions [making verbal agreements to buy without actually paying] at their shops in Shwe Bon Thar [Street in Yangon],” U Maung Maung Kyaw said. “They were following orders from their superiors.”

Lawsuits will be filed against the detainees under Article 38 (currency trading without a license) of the Foreign Exchange Management Law at the Pabedan, Kyauktada and Pazuntaung township police stations in Yangon, he said.

“Initially, one person was at large, but he surrendered himself to authorities on Monday afternoon,” said U Aung Myo, director of the BSI’s Naypyitaw office. He declined to reveal the detainees’ names, saying they would be identified once formal prosecution had begun.

The bureau is investigating more than 10 people who allegedly manipulated the gold and dollar markets, and has so far fingered five as having violated the regulations. The investigation is ongoing, U Aung Myo told The Irrawaddy.

Conviction under Article 38 of the Foreign Exchange Management Law carries a maximum sentence of three years’ imprisonment, a fine and confiscation of assets.

The prices of the dollar and gold skyrocketed in kyat terms in September, surpassing 1,600 kyats in the third week of the month. As a result, consumers have also seen prices of necessities such as food, petrol, medicines and transportation climb sharply.

President’s Office spokesperson U Zaw Htay said at a press conference in Naypyitaw on Sept. 24 that a handful of currency dealers were manipulating the market through “hollow greenback transactions” and that the government was investigating and would take action. Because they involve verbal agreements without payment, financial authorities view such deals as being similar in nature to no-interest credit transactions.

The day after U Zaw Htay’s announcement, the BSI arrested the five suspects and the illegal “hollow” trading in dollars and gold stopped.

U Win Myint, the secretary of Yangon Region’s Myanmar Gold Entrepreneurs Association, said, “The gold price has fallen to 976,500 kyats per tical, and the market has revived since the dollar manipulators were arrested. We have been able to allow the gold market to remain open.”

On Monday, the kyat rose slightly, trading at over 1,500 per USD, compared to 1,600 last month.

Market observers predict the currency will continue to strengthen as the illegal currency trading has been stamped out and legal moneychangers and banks are trading the foreign currency at the rate set by the Central Bank of Myanmar.

Nyein Nyein contributed to this report.