 "Indian rupee")
The Myanmar government intends to initiate the currency convertibility for the Indian rupee for trade along the border it shares with India, following the Southeast Asian country's agreement this month to deal in Thai baht with neighbours and the kyat-baht initiative for border trade with China.
"The Myanmar government intends to initiate similar currency convertibility for the Indian rupee for trade along the border it shares with India," said the Ministry of Information, Myanmar, in a statement on Tuesday.
The Myanmar government has agreed to accept the Thai baht as an official currency for settling border trade starting this month. Thailand is the second country after China to permit its national currency to be exchangeable with the Myanmar kyat for border trade activities.
Myanmar's Minister of Information Maung Maung Ohn and Minister of Investments and Foreign Economic Relations (MIFER) Aung Naing Oo said in a joint statement that the kyat-baht initiative is a significant development as Thailand is Myanmar's second-largest trading partner after China.
Myanmar and China commenced kyat-renminbi settlement for border trades in January 2022. The increasing use of non-US dollar direct currency settlement for border trade underscores the strong bilateral relations that Myanmar enjoys with its neighbours, said the statement.
The kyat-baht settlement arrangement was endorsed by an official notification and guidelines issued by the central bank earlier this month. All settlements will be conducted online as opposed to cash transactions previously.
In the fiscal year 2020-21 (November-to-October) border trade along five checkpoints of the Myanmar-Thai border Tachileik, Myawady, Kawthoung, Myeik and Hteekhee amounted to USD 4.3 billion equivalent, up from USD 3.9 billion in FY20.
Starting this month merchants along the Myanmar-Thai border who are registered with the Myanmar Economic Bank can conduct trade based on the kyat-baht exchange rate announced daily by the Central Bank of Myanmar.
In 2020-21, Thailand accounted for 17.61 per cent of Myanmar's total trade, which rose to USD 5.3 billion from USD 5.2 billion in 2019-20. Myanmar's main exports to Thailand include natural gas, base metals, electronic goods, pulses and garments.
Myanmar imports from Thailand machinery, appliances transport equipment and manufactured goods.
"Myanmar's immediate neighbours account for up to 70 per cent of the country's total trade volume. Direct non-dollar currency settlements will help to broaden and facilitate bilateral trade, flow of goods and other forms of payment and settlement with the respective countries," the two ministers said.
They added that as Myanmar gradually adopts full bilateral currency-swap arrangements with various countries, regional economic cooperation will also be strengthened. "By reducing dependence on the US dollar, we will mitigate the risk of sudden exchange rate swings due to external geopolitical factors."
The two ministers said Myanmar can also reduce physical money in circulation as more trade transactions migrate online.
"If we can succeed with such arrangements with our immediate neighbours, Myanmar can gradually reduce the dependence on the US dollar for up to 70 per cent of Myanmar's national trade volume," they added.
The currency arrangements will also help Myanmar reduce inflation caused by the rise of the US dollar, while alleviating concerns of currency shortage within the country.
The arrangements will also contribute to the economic recovery of the country, which, despite rising energy prices, expects to record modest GDP growth in the current fiscal year ending October 2022.
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