Myanmar Regime’s US Dollar Restrictions Halting Border Trade
By The Irrawaddy 25 July 2022
The Myanmar junta’s latest restrictions on the US dollar exchange rate and newly-introduced red tape are forcing local exporters to stop the border trade with Thailand and China.
Recently, the military regime reversed its position on accepting Thai baht and Chinese yuan for settling border trade transactions and ordered that the trade be carried out with US dollars at the official exchange rate set by the junta-controlled Central Bank of Myanmar (CBM).
Myanmar mainly exports agriculture produce such as corn, beans and pulses, sesame and other oil crops to China and Thailand.
One merchant from Shan State’s Muse, the key town for Myanmar’s border trade with China, said: “The rate fixed by the Central Bank of Myanmar is 1,850 kyats to a dollar. But the rate is around 2,450 kyats in the open market and the gap between them is huge. So we suffer a loss in every export we make. The border trade has almost halted.”
In April, the CBM ordered financial institutions to convert foreign currency earned by its customers into kyat within one business day at an official exchange rate of 1,850 kyats to the US dollar.
The commodity exchange in Muse has seen fewer cargo trucks arriving since July 18, added the Muse merchant.
Another trader said: “Merchants are taking a wait and see attitude as there is no profit for them. Many of them are not making new exports. If it continues this way, it appears that exports will completely stop next week.”
With the regime desperate for US dollars, other restrictions on border trade have also been imposed. Export licenses are now granted only after buyers have paid in advance for the goods. The earnings are transferred through Myanmar banks and converted to kyats at 1,850 kyats per dollar.
Farmers are also suffering as prices for agricultural produce have dropped due to lower demand.
While sales of rice and broken rice to China through Muse are little affected, exports of other items have declined steeply with only around 40 to 50 trucks of corn, beans and pulses, oil crops, rubber, and foodstuffs now arriving in Muse daily.
Myanmar’s border trade with Thailand is also suffering due to the regime’s restrictions, said a corn merchant from Karen State’s Myawaddy, a town on the frontier with Thailand.
“There is a huge gap between the market exchange rate and the CBM’s fixed rate. The more we export, the more our losses increase. If border exports stop, the entire chain of people involved in the trade, including farmers, commodity exchange and cargo truck drivers, will be affected,” he said.
Since the junta imposed the new restrictions on US dollars, the price of Shan State corn has declined from over 1,000 kyats per viss [1.6kg] to around 800 kyats.
Myanmar earned US$4.33 million from border trade exports in April of this year, according to the junta-controlled Ministry of Commerce.