Myanmar to curb use of US dollar to stabilise domestic currency
Myanmar has announced it will curb the widespread use of US dollars by firms, to stabilise the tumbling domestic currency, the kyat.
The central bank has revoked foreign exchange licenses from businesses ranging from hotels and restaurants to golf clubs and hospitals.
It said a growing preference for the US dollar has spurred demand for it, and led to "exchange rate instability".
The US dollar is used widely in the tourism industry.
Since the end of military rule in 2011, Myanmar has launched economic reforms, adopting a floating rate for the kyat.
The licences, however, have allowed many people to use the dollar for domestic transactions, bypassing the local financial system.
The kyat has fallen more than 20% so far this year, making it one of the worst-performing currencies in the region.
In a statement, the country's central bank said the special licenses were revoked to combat "dollarisation".
"Because of payments and sales in dollars, there has been dollarisation leading to an increased need for dollars, weakening the 'Kyat' and causing exchange rate instability," the national lender said.
With an exchange rate of more than 1,200 kyat to one dollar, larger cash transactions require stacks of bank notes if not conducted in US dollars.
Cutting down on cash
After the changes, only banks and official money changers will still be allowed to exchange dollars. Other companies will have to return their permits by 30 November.
According to the statement, all hotels, travel agencies, restaurants, duty free shops, airlines, hospitals, freight forwarders, telecom enterprises, media, apartments, super markets, souvenir shops, gold clubs and the military-owned Myanmar Economic Holding will have to give back their licences.
The bank said the move was intended to promote the use of 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 online payment system.
Myanmar is not the only country in Asia where the US dollar is used as an unofficial second currency, essentially replacing the national currency for all larger transactions.
In Cambodia, the US dollar is also used alongside the domestic currency, the riel, which is used mostly for fractional dollar amounts.