On Tuesday, the ministries of information and investment announced that Myanmar would use the baht to settle border trade transactions instead of the US dollar. They were also considering a similar plan to utilize the Indian rupee.
The military-controlled government has already stated last week that it will accept the Chinese renminbi as its official settlement currency.
According to Myanmar Now, the move will reduce the risk of sudden exchange rate swings due to geopolitical factors, further lowering inflation caused by a stronger dollar.
As a result of the monetary arrangements, the economy should also experience moderate growth in the fiscal year ending October 2022, even with rising energy prices.
Since the army ousted a democratically elected government a year ago and launched bloody crackdowns on opponents, the economy has deteriorated and there has been a struggle to impose order amid civil unrest and armed resistance from pro-democracy militias and rebels from ethnic minorities.
US Dollar to Myanmar Kyat
After an exchange rate slump last year, the Central Bank of Myanmar briefly tied the kyat to a reference rate against the US dollar.
“Economic sabotage” was blamed for a weaker kyat last year, according to a statement from the military-controlled government.
As of this month, registered merchants along the Thai border with Myanmar will be able to conduct business using the daily kyat-baht exchange rate announced by Myanmar’s central bank, according to a statement.
Indian and Thai authorities did not immediately respond to a request for comment.
Besides China, Thailand is Burma’s second-largest trading partner. During the fiscal year 2020-2021, the value of trade was $5.3 billion, the spokesperson said.
Myanmar’s most important exports are gas, metals, pulses, and garments, the government spokesperson said, adding that the country imports mostly machinery, transport equipment, and manufactured goods from Thailand.