07 February 2019
Central Bank of Myanmar confirmed that the time to announce the reference exchange rate has been swapped to 4pm while the rate used to be published in the morning.
It is also reported to publish a market-based reference exchange rate for the day.
The change in system is designed to help private banks and money changers to be able to set the exchange rate on an efficient manner based on the reference.
The reference rate used to be published at 9 am in the morning for the dollar trade amongst banks and auction-based trade between Central Bank and private banks.
For more on the change, U Than Lwin, Retired Vice Chair of the Central Bank explains, “This is a technical change, not a policy change. The time to publish the reference rate has been changed to 4 pm when the market almost closes. Before, the rate is out in the morning so people have no idea what changes occur in rate throughout the day. So they don’t grasp the changes over the whole day. Now it has been changed to the evening time, and so people will be able to get the rate changes throughout the day and can be prepared for the following day.
The CBM’s objective is to manage excessive short-term volatility of the exchange rate.
He also responded to the question of what this change in system will bring to the market.
“I think this change will help cope with the misalignment between the Central Bank’s reference rate and market rate due to the old time slot which publishes the reference rate in the morning, not covering rate changes throughout the day. I guess this will bring good to the market.”
The reference exchange rate of Myanmar Kyat against U.S. Dollar is calculated as weighted average exchange rate based on interbank and bank-customer trades conducted by authorized dealer banks.
The Vice Chairman comparing the local market to the foreign markets added, “In foreign market, they publish the reference rates three times a day… morning, afternoon and evening. But as Myanmar’s market is still in the early stage and not that big and demanding yet, publishing the rate one time a day is enough.”
The central bank will collect and calculate the exchange rates of private banks and money changers from 9 am to 3 pm and will publish the reference exchange rate at 4pm on the website of the Central Bank.