Myanmar’s junta has arrested 51 people for allegedly trying to cash in on the sudden spike in the price of gold and U.S. dollars, according to the regime-controlled central bank.
In a statement released Friday, it said foreign exchange speculators in Yangon and Mandalay, foreign currency dealers, people transferring money and officials from three companies had been prosecuted.
The Central Bank of Myanmar said its gold and currency market monitoring team took action in accordance with the anti-money laundering and foreign exchange management laws.
Dollar and gold prices have been rising in the country since last Wednesday’s announcement by the U.S. Treasury Department that it was adding the junta-led Myanma Foreign Trade Bank (MFTB) and Myanma Investment and Commercial Bank (MICB) to a sanctions blacklist in connection with the Myanmar military’s purchases of arms from foreign sellers “including sanctioned Russian entities.”
The exchange rate on Wednesday was 2,890 Myanmar kyat to the dollar before the announcement, rising 7.3% to 3,100 kyat the following day.
Last Friday, the central bank announced measures to control forex levels, including an order to conduct dollar transactions between the Authorized Dealer and business people through the Online Trading System.
It set the exchange rate for online trading in a range of 2,920-2,922 kyat per dollar and said that U.S.$4.81 million was traded.
A foreign currency dealer in Yangon who did not want to be named for security reasons told RFA that some of those who were arrested last week, especially some businessmen close to the junta, had been released, but small forex dealers were still under arrest.
“How can I say this? Some were arrested, some were released by [paying] bribe money,” the dealer said. “But some could not afford it, and small dealers are still being held.”
The price of gold also rose suddenly in the space of a day, up 6.6% to 32 million kyat (U.S.$1,528) for 16.331 grams of 24 karat gold.
A gold shop owner in Yangon said that if the military junta wants to control the rise in gold prices, it will need to allow the forex trade to continue.
“Everything is related. The world price of gold went up. Local gold traders also didn’t trade because the price wasn’t stable and they kept the gold for a while,” said the shop owner, who also requested anonymity. “
“The gold price can be controlled if the right to use foreign currency dollars is free. Currency flows between domestic and foreign [markets] and the money used for overseas exports should be properly verified.”
One market watcher, who also declined to be named, told RFA that if the junta arrests traders and charges them with currency speculation, it still won’t be able to control the dollar market and will only cause difficulties for those who need dollars.
“Some businesses will stop,” he said. “The ones who will face difficulties are those people who need to go abroad for medical treatment as soon as possible. It will also be difficult to buy money for people who are going to travel abroad with their families. The large market among the dealers will not disappear.”
A lawyer, who also declined to be named for security reasons, said that if the junta could not control the value of the dollar soon, the price of basic food items could rise and the situation could worsen.
“What will happen next will be speculation on the fuel prices. And next, if it comes to basic food, the country will be unstable and it could turn out very badly,” said the lawyer, adding that the U.S. government’s blacklist, which bans U.S. citizens and companies from doing business with Myanmar’s Ministry of Defense, has hurt the junta badly.
Junta Deputy Information Minister, Maj. Gen. Zaw Min Tun, told state-controlled media that the U.S. move is aimed at triggering a political and economic crisis in Myanmar.
RFA called the Central Bank of Myanmar’s Financial Management Department Director General, Aung Kyaw Than, but he did not answer.
Translated by RFA Burmese. Edited by Mike Firn.