Myanmar will start accepting the Thai baht for settling border trade transactions and is also looking at a similar plan to use the Indian rupee, the ministries of information and investment said on Tuesday.
Myanmar’s military-controlled government has already said it would also accept China’s renminbi as an official settlement currency.
“By reducing dependence on the US dollar, we will mitigate the risk of sudden exchange rate swings due to external geopolitical factors,” the ministries said in a statement, adding the move would help reduce inflation caused by appreciation of the dollar.
The arrangements would also help support economic recovery, the statement said, adding that – even with rising energy prices – Myanmar should record “modest” gross domestic product growth in the fiscal year ending October 2022.
Myanmar’s economy has slumped since the army overthrew an elected government a year ago and launched a bloody crackdown on opponents.
The government is struggling to impose order amid widespread civil unrest and armed resistance from pro-democracy militias and ethnic minority rebels.
Last year, the Central Bank of Myanmar briefly tried tethering the kyat to a reference rate against the dollar after a slump in the exchange rate.
The statement accused opponents of trying to trigger distrust in the banking and financial system and said a weaker kyat last year was “stoked by economic sabotage”.
Registered merchants along the Thai border with Myanmar could from this month conduct trade based on the kyat-baht exchange rate announced daily by Myanmar’s central bank, said the statement.
Indian authorities did not immediately respond to a request for comment.
Thailand is Myanmar’s second biggest trading partner behind China. Trade in the 2020-2021 fiscal year was worth $5.3 billion, the statement said.
- Reuters, with additional editing by George Russell