Myanmar abolishes dollar surrogate

YANGON, March 20, 2013 (AFP) - Myanmar on Wednesday announced the abolition of its US dollar proxy currency, in the latest step towards economic normalisation as the impoverished former pariah opens to the world.

More than $30 million worth of Foreign Exchange Certificates (FEC) will be phased out of existence, Finance Minister Win Shein said in parliament, without giving a timeframe for the move.

The currency, introduced by the former junta two decades ago as an alternative to the US greenback -- which it officially banned -- is no longer required, he said.

"A scheme will be set up to systematically abolish FECs in collaboration with the Central Bank of Myanmar, government banks, private banks and related organisations," Win Shein told MPs.

Economists welcomed the move, which was expected as part of the country's economic liberalisation.

Many government ministries conduct their financial affairs in FEC, while certain transactions involving customs -- including the purchase of foreign imported cars -- require the currency.

Sean Turnell, a Myanmar economic expert at Australia's Macquarie University, said the announcement could be a new test of public confidence in the government's handling of the economy.

"In the past movements like this have caused panics, but perhaps there is greater trust in monetary arrangements now," he said, adding that those holding FECs would rush to convert them to dollars.

"Given the rise of the kyat, and depending on when they bought the FECs, many FEC holders might experience a considerable capital loss in kyat terms," Turnell said.

But Central Bank director general Win Thaw told AFP the move would have little impact because it is now possible for people to legitimately exchange their FECs for dollars.

Myanmar's government has embarked on a series of political reforms since coming to power in 2011 that have caused the West to scrap or freeze most sanctions.

The country embarked on a managed flotation of its currency in April last year, while it has also drawn up new foreign investment legislation in a bid to boost its attractiveness to international business.

FECs were previously seen as a means for the junta to earn greenbacks from tourists, who were at one point forced to buy several hundred dollars' worth of the certificates when they entered the country.

"Myanmar has experienced a tourism boom since 2011, making the system of foreign exchange certificates a barbaric relic of Myanmar's past economic isolation," said Rajiv Biswas, an economist at IHS Global Insight.


-- (c) Copyright AFP 2013-03-20

Big news! And a good step.

Glad to see the country is moving in the right direction. Granted, they still have a way to go.

Should boost the dollar for a while or at least help to stabilize it.

Should boost the dollar for a while or at least help to stabilize it.

That's already happening. It doesn't need their help.

Like some other countries, getting rid of the greenback is a good idea but you can bet the coercion was made by the recent visits by the US. US needs the demand to hold up the dollar. It can't sustain itself much longer as a stable currency with the mounting US debt and printing money to meet debt, thus devaluing the currency.

Funny ... they give in to the criminal international banksters and the most corrupt Government on earth [the US Government] and some still think it's a good thing to do.

Amazing.

What a pity. Now the black market exchange rate between FEC and USD is obsolete. Some smart cookies changed piles of FECs against USD which paid for their vacation.......

Same happened 30 years ago in Vietnam; for those who remember the Vietnam Dollar.

How stupid, how governments try to control the free market environment; regardless of capitalism, socialism, communism or stalinism. The North Koreans abolished the USD all together in favour of the EUR - politically motivated move!

What a pity. Now the black market exchange rate between FEC and USD is obsolete. Some smart cookies changed piles of FECs against USD which paid for their vacation.......

Same happened 30 years ago in Vietnam; for those who remember the Vietnam Dollar.

How stupid, how governments try to control the free market environment; regardless of capitalism, socialism, communism or stalinism. The North Koreans abolished the USD all together in favour of the EUR - politically motivated move!

I remember the Vietnam dollar, and made some nice profit from it.

What does this actually do? I'm confused. It sounds like they are just going to remove all the FECs from circulation. This does nothing regarding "getting rid of the greenback."

Like some other countries, getting rid of the greenback is a good idea but you can bet the coercion was made by the recent visits by the US. US needs the demand to hold up the dollar. It can't sustain itself much longer as a stable currency with the mounting US debt and printing money to meet debt, thus devaluing the currency.

Truer words were never typed. The US economy is a wreck looking for a place to happen.

Like some other countries, getting rid of the greenback is a good idea but you can bet the coercion was made by the recent visits by the US. US needs the demand to hold up the dollar. It can't sustain itself much longer as a stable currency with the mounting US debt and printing money to meet debt, thus devaluing the currency.

Truer words were never typed. The US economy is a wreck looking for a place to happen.

Excuse me. But, I think these guys have done their homework a little better than you guys... U.S. Economic Outlook

Back on topic thanks!

I've still got FEC's. I'm thinking about rushing to the bank after water festival to change them.