Import prices likely to drop as FX deposits must be converted into local currency at CBM reference rate of K1,850

The Foreign exchange earned by locals in Myanmar must be deposited in accounts at the authorized banks and exchanged for the local currency at the Central Bank of Myanmar’s reference rate of K1,850, which can result in a drop in the import prices, Dr Soe Tun, an economist shared his opinion on his social page.
According to the provisions stipulated in Sections 11, 12 and 13 of the Foreign Exchange Management Law, all the foreign currency earned by locals have to be exchanged for local currency at the CBM’s reference rate of K1,850 by opening the accounts at the authorized dealers in the country within one working day, according to the notification released on 3 April.
The importers can exchange the US dollar at K1,850 at the licenced banks, and the prices of fuel oil, edible oil, pharmaceuticals, construction materials and consumer goods are expected to drop by 10 per cent within a short time if there is sufficient foreign currency for sales to import those important goods, Dr Soe Tun gave a remark.
Meanwhile, the export sector involving rice, broken rice, various beans and pulses, corn, fishery products and other goods sees no changes in cost and freight (CFR) and Free on board (FOB) prices. However, policy changes will incur a massive loss to the exporters as the exchange rate falls by 10.8 per cent between the CBM’s rate at (K1,850 per dollor) and the unofficial exchange K2,050. For instance, if the exporters sell one million dollars, they lose about K200 million.
This policy can also impact the dollar holders in the long term. The gold price can also decrease by tracking the currency appreciation, said Dr Soe Tun. — NN/GNLM