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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".
The current official exchange rate pegs one US dollar at 6.41 kyat. 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'
Analysts said the official exchange rate could be fixed around 800 kyat to one US dollar, the current unofficial rate. The current official exchange rate pegs one US dollar at 6.41 kyat.
"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. 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.