Burma replaces dollar with euro to lessen impact of US sanctions

DVB (August 19,2003)

The SPDC (State Peace and Development Council) had ordered businesses in Burma to start using Euro and stop using the US dollar in order to lessen the impact of sanctions imposed by the US.

The instruction was issued on 10 August but most people only knew it on 15 August, according to some businessmen in Rangoon.

According to a report from Rangoon by Associated Press, the directive came after the meeting between the SPDC top leaders and businessmen on 10 August

Although the US sanction law on Burma which was signed and ratified by the US President, George W Bush on 28 July would come into effect on 28 August, businessmen in Rangoon are said to be feeling increasingly jittery.

Due to the directive, sales in Rangoon seemed to slow down and the price of US dollar is reported to have gone down slightly. Before the office closed, the value of FEC (Foreign Exchange Certificate) has plunged to 650 kyats.

“Some merchants say that the value of euro is 1100 kyats now while the US dollar is 1050 kyats. But I have neither seen euro nor have I used it,” said Khun Tun Oo, a businessman and the leader of Shan Nationalities League for Democracy (SNLD).

In addition, many merchants like Khun Tun Oo felt insecure and worried because they did not know how long euro would last, according to Khun Tun Oo.

“When I came back from the office, I heard that the FEC is to be withdrawn. That would be only rumour. The situation is like that but the sales are quite slow these days,” said Khun Tun Oo.

There were also rumours saying that euro could be purchased by dollars and then deposited at the bank.

“I also heard that you could now open an euro account at the MFTB (Myanmar Foreign Trade Bank),” said Khun Tun Oo. “As they haven’t withdrawn the FEC, you could use FEC alongside euro, I think.”

Some may wonder how the change would affect the political and economic situation in Burma.

“You can’t predict it yet …because the laws are complicated in Burma, I heard,” said Khun Tun Oo. “Whatever currency you use, there will be more profits in transactions.”

He also thought people would not suffer much as long as China, India and Thailand did not close the border because there was not much export by air and “the volume of trades with China will become bigger and some will go to Thailand.”

But Dr. Zaw Oo, a Washington-based Burmese economist, argued that the US sanctions are just at the beginning. Later, the SPDC will face more problems.

“The SPDC’s strategy of not pegging to the US dollar will herald the prospect of unstable conditions,” said Dr. Zaw Oo. “In short, the impacts of US sanctions would not only be limited to Burma’s export to the US as we expected, but more complicated issues Burma”.