The foreign exchange landscape in Myanmar is set for a dramatic change.
Bank of Myanmar recently said it is revoking all foreign exchange accepter and holder licenses, in a bid to stabilize exchange rates and to wean the local population off ‘dollarization.’
The ruling will not affect banks and registered money changers, but it will have a wide-ranging impact on the travel and hospitality industry.
Businesses such as hotels, travel agencies, restaurants, duty-free shops and airlines will no longer be permitted to trade in and exchange foreign currency and must return their Forex licenses by November 30.
The Central Bank cites the ease of use and wide acceptance of US dollars in Myanmar as a driver of exchange rate instability.
Authorities also want to encourage a wider adoption of credit and debit cards in the country.
"It is intended to promote the use of the Myanmar Kyat in making payments for goods and services within the country and to cut down the use of cash by encouraging domestic debit cards and credit cards, internal payment cards and on-line payment systems," the central bank said in a statement.
Bank officials said the original granting of Forex money changing licenses to tourism businesses was to make transactions more convenient for visiting foreign tourists but it had sparked widespread use of the US dollar to the detriment of the Kyat.
The Kyat has weakened by about 20% against the US dollar in the last six months.
