Inflow of large amounts of twenty-thousand currency notes to monetary market absolutely impossible
MAJ-GEN Zaw Min Tun replies to queries raised by a reporter on the distribution of twenty-thousand-kyat new Myanmar currency note as follows: —
Q: Mingalaba! I would like to raise a question related to the printing and distribution of Myanmar currency notes of twenty thousand kyats on 23 July 2023. People are worried about hiking prices of foreign exchange rates and gold prices because of the printing and distribution of twenty thousand currency notes. So, how do you clarify current situations to the government and the people?
A: We enquired about the root causes of such an event. First, we found it as rumours. I would like to firstly explain the spreading of rumours. The Central Bank of Myanmar announced 8 am yesterday concerning the circulation of a new currency twenty-thousand note. In mid-day, two rumours came out. The first rumour was the circulation of twenty-thousand-kyat notes; more currency notes may come out; higher valued currency notes may emerge; Myanmar currency value will decline; and it may cause a high inflation rate. One more item of rumour came out a few hours later. Such a rumour was intentionally spread that existing currency notes may be revoked. As that day was Sunday, the forex rate of the US dollar gradually increased and the gold price rose as well. As it was an office holiday, the US dollar exchange rate was slightly high due to the lack of exchanging currencies practically. The gold price was also sharply high. This morning, the Central Bank of Myanmar issued a press release on the Q&A session for public observation. Such a Q&A session showed comprehensive facts and data.
After the CBM issued it at about 9 am, one more rumour came out between 10:30 am and 11 am. Such a rumour was based on some parts of the Q&A session of the CBM. It showed that everybody can take three twenty thousand currency notes each. Moreover, it mentioned that a large number of such currency notes based on the Myanmar population have been printed and published. At the same time, some exile media mentioned the fabricated stories presented by a Myanmar economic observer. The rumour carried that it was not good in the economic situation as the government published new currency notes. Consequently, the US dollar exchange rate and prices of gold were high. Later, prices of other commodities were also raised. As a main reason to cause such an event, the CBM issued an announcement on 23 July 2023, regarding the export and import measures. Once, an announcement was mentioned that 65 per cent of earnings from export must be exchanged with Myanmar currency.
The Chairman of the State Administration Council always talked about 65 per cent of exchanging the currency whenever he met with MSME businesspersons or other businesspersons. He told businesspersons or industrial entrepreneurs that the exchange rate with Myanmar currency must be amended and reduced at an appropriate time. On 13 July, the CBM issued a press release that 50 per cent of earnings from export must be exchanged with Myanmar currency instead of 65 per cent. After that, everybody may notice that the trade process of the nation speeded up. Moreover, incomes from foreign exchange were higher in the market. The US dollar forex rate was more stable. At present, as twenty thousand currency notes were published, we accept that rumours were spread to cause instability in situations. Importantly, I would like to inform such an issue and guarantee them the stability of the situation. The Q&A session of the CBM issued at about 9 am today was comprehensive.
However, it includes the technical terms and the public may understand it. What I want to say regarding this case is that… No 1, the K20,000-note is not issued in a large sum but it is just a commemorative note. Other countries had issued currency notes as a gesture of commemorative events. But, we have never made that before. We minted gold coins marking the 75th Diamond Jubilee Independence Day. At that time, although people can buy at fixed prices, they cannot purchase a lot.
The current case is like that. Another fact is that it includes in the statement of the Central Bank of Myanmar (CBM). The new K 20,000 note is just a commemorative note and it will be granted if the people pay the equal value of note at the bank. There is also a limitation. If the people exchange their damaged notes with new K 20,000 notes worth K10 million at the bank, they will not be granted K10 million. One person can get only three K20,000 notes. These three notes will not be issued for free. As the saying goes, if one gives rice, he can get oil. The banknotes are aimed at exchanging damaged banknotes. The CBM will destroy all the damaged notes. Therefore, I am sure that it is completely impossible for new K20,000 notes to enter the financial market massively. I also guarantee that it will not happen. So, there will be no inflation. It spreads rumours to occur instability. The next fact is that the government also guarantees businesses in Section 36 of the Constitution. The government abides by the 2008 Constitution. It also assures with Section 36 (d) shall not nationalize economic enterprises and Section 36(f) shall not demonetize the currency legally in circulation. Therefore, we will not illegalize the officially issued currency as an illegal denomination. I also reaffirm that. The last one is that some are preparing to spread rumours in time regarding the current situation. The government can control these circumstances in business sectors. Therefore, what I want to inform the people is that they can operate for their socioeconomic development, and I guarantee it. Thank you. — MNA/TTA, KTZH
