CNI News

3 Oct 2022

Allowing fuel companies to make Yuan payments to the Central Bank of Myanmar will bring benefits for them, Managing Director U Htay Aung Kyi of Yangon-based Economic Development Initiative told the CNI.

The CBM announced on 1^st October that local fuel companies are allowed to repay foreign currencies they received from the CBM for fuel imports in Yuan.

As a result, fuel importers can bypass the shortage of US dollars and exchange rate discrepancies, U Htay Aung Kyi told the CNI.

“Generally speaking, allowing payments in Yuan is better than permitting the US dollar payment system alone. It is another option for companies. The more options they have, the better it is for you. One of the problems faced by fuel companies is payments in foreign currencies. It is beneficial for them to make payments in US dollars, Euros and Yuan.”

The CBM announced that it would accept payments for fuel imports in Yuan in accordance with the decision of the Foreign Exchange Supervisory Committee.

As local fuel companies engage not only in importing fuel but also in exporting goods to China, they have Yuan to make payment for fuel imports.

It seems that the CBM wants to diversify its foreign reserves to Yuan, an economist said.

He told the CNI that some companies import fuel and export rice to China and receive Yuan. When they import fuel, they borrow US dollars from the CBM. Now, they don’t have to exchange Yuan for US dollars to repay the loans and can make payments in Yuan. It is beneficial for them because the move reduces their transaction costs. Another factor is that Myanmar mainly exports commodities to China. I think the CBM wants to diversify its reserves to Yuan in addition to US dollars, Singapore dollars and yen it maintained previously.”

Myanmar imports fuel worth US$ 2 billion annually. As payments for fuel imports can be made in Yuan, the gap between the official exchange rate and market exchange rates can be narrowed, according to entrepreneurs.