In a renewed crackdown, Myanmar’s military regime has ramped up its efforts to suppress unlicensed bureaux de change amid a rapid rise in the value of the U.S. dollar. As the dollar has soared on the unofficial market, the junta has escalated arrests and investigations of individuals involved in illegal currency transactions. On January 14, 2024, authorities announced that they had investigated 26 individuals suspected of buying, selling, and exchanging foreign currency without proper authorization, with nine facing prosecution and six being formally charged in township courts.
In addition to targeting physical money changers, the junta is focusing its attention on online platforms. Twelve Facebook groups, five pages, and ten individual posters have been identified for their role in facilitating the illegal exchange of foreign currency. The crackdown comes as the unofficial exchange rate for the U.S. dollar, which had been hovering around 4,580 kyats per dollar, skyrocketed to 4,615 kyats on January 13, and hit 4,820 kyats on January 15. Following the initial wave of arrests, the rate slightly decreased to a range of 4,650 to 4,680 kyats. In contrast, the official exchange rate remains fixed at 2,000 kyats per dollar.
The surge in the dollar’s market price is primarily driven by rising demand for foreign technology, especially solar panels and battery-powered appliances, as Myanmar grapples with chronic electricity shortages. In Yangon, electricity availability is limited to just eight hours per day, typically in four-hour blocks. As a result, there is a significant demand for solar panels and generators, with many consumers importing these products to meet their energy needs.
Notably, one of the largest importers of solar products is Aung Pyae Sone, the son of junta chief Min Aung Hlaing. Aung Pyae Sone has reportedly capitalized on the political instability in Myanmar to profit from the importation of solar panels and related products. Since 2023, the junta has exempted solar panels and related equipment from customs duties to ensure a steady supply of power.
As part of the broader economic tightening, the junta has cracked down on various sectors, including gold and currency markets, where soaring prices have been attributed to people seeking safe havens for their money amid the ongoing crisis. Last year, the regime arrested several prominent gold traders, including U Aung San Win, owner of Aung Thamadi Gold Shop, and U Myo Thu Win, of Academy Gold Refinery, among others. While some traders have been released on bail, others have reportedly had to pay bribes to avoid prosecution.
The gold market in Myanmar has experienced significant price fluctuations as global gold prices have risen. On January 13, the price of gold surged by $10 per ounce globally, reaching $2,696. Consequently, the price of 24k gold in Myanmar rose from 6.4 million kyats per tical to 6.6 million kyats. However, the regime’s Gold and Currency Market Monitoring and Regulatory Working Committee set the official price for gold at just 5.4 million kyats per tical, creating a significant discrepancy of nearly 1.2 million kyats between the market price and the official price.
In this context, foreign exchange traders are adopting a cautious approach, worried that the crackdown on money changers might extend to other sectors, including gold merchants. A Yangon-based gold merchant remarked, “Some foreign exchange traders have been arrested, but no gold merchants have been arrested yet. Gold prices have risen significantly in the global market, and 24k gold is traded on the black market. In theory, gold prices are set by the government, but traders normally do whatever they want. But now they’re being cautious.”
The political uncertainty surrounding the U.S. presidential transition, set for January 20, 2024, has further contributed to currency fluctuations in Myanmar, with the global value of the dollar impacting local markets. As the junta intensifies its efforts to control the currency and gold markets, it is clear that both local businesses and consumers are grappling with a complex and volatile economic environment, where government intervention continues to create tensions within the financial markets.
Related topics:
- India Surpasses China in Gold Purchases, Buying 51% More in Three Months
- Gold Rates Skyrocket in Chennai on Diwali, 24K Gold Exceeds Rs. 81,000 Per 10 Grams
- Gold and Silver Prices Rise Across India on January 13, 2025
