Transaction settlements on agricultural products are instructed to be made in Dollars as an official settlement currency at the border points. Consequently, exports to China through the Muse border post dropped, as traders engaged in the Muse border mainly deal in Yuen – Kyats dealings.
Previously, Myanmar exported around 70 truckloads of goods per day to China through the Kyin San Kyawt checkpoint in the Muse trade zone. At present, only 40 trucks carrying export items are seen in the border market.
“The directive of the Dollar as official settlement currency adversely affected the exports. The supply of corn and pulses has not been seen. The number of cargo trucks is down by 20 – 30 for now,” said Min Thein, vice-chair of the Muse Rice Wholesale Depot.
On December 14, 2021, CBM released a notification that Yuan/ Kyat cross-currency settlement in the bilateral transaction was officially allowed in the border areas between Myanmar and China to boost the bilateral cross-border trade, facilitate the trading and bilateral transaction, increase the use of domestic currency as per the objectives of the ASEAN Financial Integration.
After export earnings on agricultural products were earlier set to be paid in dollars instead of Yuan, the official exchange rate against the US dollar was set at 1,850 Kyats. At present, the dollar was valued at over 2,500 Kyats in the informal FX market, indicating a large gap in the exchange rate. Consequently, it dealt a blow to the agricultural products and exports drastically fell, traders said.
