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Burma to float kyat in April to attract investment | Burma to float kyat in April to attract investment |
(40 minutes later) | |
Burma has said it will start a managed float of its currency from 1 April to attract foreign investors. | Burma has said it will start a managed float of its currency from 1 April to attract foreign investors. |
The Central Bank of Myanmar (Burma) said the currency, the kyat, will "from now on be determined by supply and demand". | The Central Bank of Myanmar (Burma) said the currency, the kyat, will "from now on be determined by supply and demand". |
It is aimed at unifying the country's various exchange rates. | |
Burma has been implementing reforms since a civilian government, albeit one led by former generals, took over from the military last year. | Burma has been implementing reforms since a civilian government, albeit one led by former generals, took over from the military last year. |
'Eliminate restrictions' | 'Eliminate restrictions' |
The current official exchange rate pegs one US dollar at 6.41 kyat. | |
However, analysts said when it is floated, the currency could be valued around 800 kyat to the dollar, which is the current unofficial or black market rate. | |
Under a managed float system a currency's exchange rate is determined by the market. | Under a managed float system a currency's exchange rate is determined by the market. |
At the same time the central bank publishes a daily reference exchange rate to influence the market. | At the same time the central bank publishes a daily reference exchange rate to influence the market. |
"A key part of this programme is to unify the various exchange rates, and gradually eliminate restrictions on current international payments and transfers abroad," said the Central Bank of Myanmar in a statement to state media. | |
Opening up? | |
Resource-rich Burma wants to attract foreign investment to offset the impact of Western sanctions, however the multiple exchange rates have deterred investors in the past. | |
Burma is rich in gas, timber and precious stones. | |
Analysts said this was a positive step in dealing with corruption as well. | |
"It removes many of the difficulties and corruption incentives that have been in place with this dual [currency] system," said Sean Turnell, a Burma expert at the Macquarie University in Sydney. | |
Key parliamentary by-elections are also being held on 1 April, in which dissident Aung San Suu Kyi would be contesting one of the seats. | Key parliamentary by-elections are also being held on 1 April, in which dissident Aung San Suu Kyi would be contesting one of the seats. |