March 20 - Myanmar plans to set the country's new exchange rate at around 820 kyat per U.S. dollar, two bankers said on Tuesday, marking one of the country's boldest economic reforms as it emerges from years of isolation. Ciara Sutton reports.
For years Myanmar's economy has revolved around a black market. Now as the government starts to welcome western investors it's trying to play by their rules It's pushing ahead with economic reforms and launching a managed float of its currency. Sources say the new rate will be around 820 kyat per dollar - a long way from the official exchange rate of 6.4 kyat per dollar but much closer to the black market rate. Thai-based economist Christopher Bruton says the move is unlikely to cause major economic waves. (SOUNDBITE) (English) DIRECTOR OF DATACONSULT, CHRISTOPHER BRUTON, SAYING, "Basically the economy has been working for a long time on the black black market rate. Also you must remember that the Burmese people haven't trusted their currency." An end to U.S. and European sanctions against Myanmar is imminent. And reports say foreign investors will no longer need to work with a local partner. The currency reform is also a major step in ending market distortions caused by the dual system. But it could still cause some anxiety in a country where memories of economic mismanagement are fresh. SOUNDBITE) (English) CHRISTOPHER BRUTON SAYING, "The question is, will the Kyat be soon accepted as a working currency. We hope to see it, but the government has got a long way to go to establish the credibility for that to happen" The float coincides with political reforms designed to end half a century of isolation in the former British colony. But it will still a shock for government institutions, which have been using the official exchange rate of 6.4 . Ciara Sutton, Reuters