Myanmar’s economic crisis fuels underground currency trade

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As Myanmar’s economic crisis deepens after February’s military coup and parts of its financial system freeze, many in the conflict-torn country are turning to online groups to bypass channels. currency exchange officials.

The fragility of the financial system was further exposed this week when the kyat currency fell to new lows after the central bank backed down from attempts to support it. Many licensed exchange offices and gold shops closed in the ensuing turmoil.

Online groups, which operate primarily on Facebook, have become a way for buyers and sellers of currencies to connect, often relying on trust when arranging physical exchanges of banknotes.

“I posted to sell old tickets yesterday in the group,” Yangon resident May Lay said, referring to what she said was the sale of around $190 in kyats on a Facebook group.

“I lost my job and had no income recently. Life is difficult with a one-year-old,” she said, noting that her household food expenses had doubled.

In the months following the February 1 coup, long lines of people lined up to withdraw money from banks, although recently kyat savings have been increasingly affected, the currency having lost 60% of its value against the dollar in September.

Speaking after the World Bank warned this week that the economy could collapse by 18% this year, ruling military council spokesman Zaw Min Tun said Thursday (September 30) that the central bank will not had been unable to meet the local demand for dollars.

One of the largest groups set up on Facebook called “Dollar Buyer Seller Direct” had around 170,000 members, with the group’s admin warning users to be careful before making a deal.

“The seller, the buyer, both take responsibility,” he warned.

The group appears to have been taken down in recent days, although at least one other site has emerged to replace it.

In Myanmar, silver traders are supposed to get a license to operate. Central bank officials did not respond to requests for comment.

Asked about such sites using its platform, Rafael Frankel, Emerging Markets Public Policy Director, Facebook Asia-Pacific, said: “Our dedicated team, including regional experts, continues to monitor the situation in Myanmar in real time and we will take action on anything that violates our policies as soon as we become aware of them.

“Our thoughts are with the people of Myanmar at this difficult time,” Frankel said.

Dollar smuggling

Yet, with some money changers having halted operations and official exchange rates now well out of step with market rates, more people have been drawn to online venues to make their own transactions, which are done in person.

“It’s like a black market. Both parties need to worry until the deal is done,” said Ye Yint Tun, 33, who became an unofficial currency broker after losing his job as an expat real estate agent.

While initially asking for a 20% fee, he has now reduced it to 2% to make it more attractive and estimates that he earns around 10,000 to 20,000 kyat a day, or around 4 to just over 8 dollars, based on recent exchange rates.

“There are chances that you will get robbed while you are trading. So you have to be very careful. »

Online groups also exploit the flow of money sent by foreign workers to neighboring countries such as Thailand.

“Millions of dollars are smuggled into Myanmar daily from Thailand,” said a Thailand-based unlicensed silver trader, noting that the roughly four million Myanmar workers in Thailand had to send money back to members of their family.

“We use Facebook as a platform to sell money,” said the trader, who requested anonymity.

Myanmar workers in Thailand pay traders with their earnings in Thai baht, who in turn give kyats to family members in Myanmar and use the baht to buy US dollars.

Another Thailand-based trader described how US dollars were smuggled into Myanmar overland, sometimes hidden in clothing or household items.

“In September alone, I traded around 30 million baht ($890,000). The trade is much higher compared to previous months,” the trader said. – Rappler.com

$1 = 33.7800 baht

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