(Mizzima)
– The Burmese government will move to
equalize its foreign exchange rates following a trial foreign exchange auction
this month, a central bank official told Reuters news agency on Monday.
Burma
is trying to integrate its economic system to international standards, and the
float will mark the most substantial economic reform yet, and follows extensive
political reforms.
The
currency float is a major step in Burma’s drive to normalize relations with
Asian and Western countries, and will open the door to foreign investors to
shore up its largely dormant domestic economy.
“Arrangements
are under way to float the kyat against the U.S. dollar effective April 1
through a sealed auction system,” the official, who declined to be named, told
Reuters.
“It's a
managed float system. Every day the central bank will invite sealed bids for a
certain amount of U.S. dollars from 11 private banks, which have been granted
Authorized Dealer Licenses,” the official told the news agency.
The
International Monetary Fund is currently engaged in extensive consultations
with Burma, advising on how to integrate its foreign exchange system to unify
exchange rates.
The
official said the government had calculated the national budget for the year
from April 1 using an exchange rate of 800 kyat per dollar, which corresponds
to the black market rate in recent weeks.
Since
1977, Burma has used an arcane system in which the kyat has been pegged to the
International Monetary Fund's (IMF) special drawing rights, with one dollar
equaling 6.4 kyat. Most private transactions ignored the government-set rate in
favor of the black market rate.
The
black market rate has fluctuated wildly, rising to more than 1,000 per dollar
in 2009 as foreign money as foreign money was invested in timber, energy and
gem sectors, putting many other sectors at risk.
IMF
economic advisers have been working closely with Burma to manage the
transition, which is essential if Burma is to attract foreign investment in its
resource-rich sectors and take advantage of the lifting of economic sanctions,
which could begin sometime following the April 1 by-elections.
Burma
is beset by many other problems, however, including an outdated infrastructure
system, poor communications, a lack of electricity, a censored media, a gutted
education system, a Parliament that is still learning how to produce
legislation, and a government bureaucracy that is used to being controlled by
the military.
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