The introduction of a new banknote by Myanmar’s ruling junta has pushed up the price of gold and affected the value of the country’s currency, with shadow government officials saying the move is meant to alleviate some of the regime’s financial difficulties.
The State Administration Council, the official name of the junta regime that has ruled Myanmar since seizing power in a February 2021 coup, said on Sunday that it will issue a limited number of 20,000-kyat banknotes, roughly equivalent to a US$10 bill, on the last day of this month.
The junta said the new banknote was designed to commemorate the completion of a Buddha statue. The bills, which feature the image of a white elephant, will be limited to a maximum of three per person when they are exchanged with old unusable banknotes of the same value.
After the military-owned Myawaddy news agency announced that the junta-controlled central bank would issue the new banknotes, the shadow National Unity Government, or NUG, said the regime came up with the high-denomination notes because of the financial crisis plaguing the country.
Myanmar’s economy went into a tailspin following the coup, as professionals walked off their jobs to join a civil disobedience movement opposed to the regime.
The junta’s financial mismanagement – and economic sanctions imposed by the United States, the European Union and the United Kingdom – have curtailed some revenue streams.
NUG officials also said the junta had no right to issue new banknotes because it is not an official government.
Min Zayar Oo, the shadow government’s deputy minister of planning, finance and investment, said the junta is issuing the banknotes because international sanctions have blocked its foreign income.
“When the junta faced financial difficulties due to sanctions, it started printing money,” he said. “Although they initially said that they would circulate only a limited number of the denomination, it is just the introductory step for their larger purpose which is to solve their financial difficulties.”
NUG spokesman Nay Phone Latt agreed that the junta is printing new currency because of its dire financial circumstances and said the value of the kyat would likely depreciate.
“We consider this currency to be printed by a terrorist organization,” he said.
RFA could not reach junta spokesman Maj. Gen. Zaw Min Tun for comment.
The move comes just after the NUG began a trial run of an online bank that uses cryptocurrency in an effort to disrupt the flow of foreign currency to banks run by the junta, including the country’s central bank.
The new crypto bank was developed to prevent the junta from violating bank regulations by blocking user accounts, seizing deposits, and providing personal account data to the authorities.
In the meantime, the junta’s latest move has led to unstable foreign currency exchange rates and fluctuations in the price of gold.
Following the announcement about the new banknote, the exchange rate for one U.S. dollar rose to 3,400 kyats from 3,100, landing on Tuesday at 3,300 kyats. The exchange rate for Thai baht rose to 96 kyats from about 90 kyats, while the exchange rate for Chinese yuan increased to 460 kyats from 430 kyats.
Forex instability has prompted Burmese businesses that import goods from abroad to temporarily suspend transactions.
A Burmese national who recently bought gold jewelry told Radio Free Asia that one tical, a unit of weight that is approximately 16.3 grams, of 23-karat gold was worth about 3.1 million kyats on July 23, but rose on Tuesday to more than 3.5 million kyats.
Another Burmese citizen who visited gold shops said establishments in Yangon, the commercial capital, closed on Monday due to the instability of the price of gold, though some reopened on Tuesday. Now, 24-karat bars of gold cannot be purchased at all as a safe investment, he said.
The Yangon Region Gold Entrepreneurs Association has set the price of one tical of 24-karat gold at over 2.3 million kyats – more than 1 million kyats less than the actual market price. The trade group issued a statement on Monday asking merchants to refrain from business transactions that would destabilize the price of gold because of news about the new banknote.
Translated by Myo Min Aung for RFA Burmese. Edited by Roseanne Gerin and Matt Reed.