March 29, 2012 / 10:16 AM / in 7 years

Myanmar to help state firms hurt by new FX rate

PHNOM PENH, March 29 (Reuters) - Myanmar’s government may need to extend subsidies and loans to state firms that are expected to be hit by the country’s new exchange rate regime when it takes effect next week, the country’s deputy central bank governor said on Thursday.

Maung Maung Win told Reuters that disruption to the economy caused by exchange rate unification was expected to be limited as state firms only make up about 10 percent of the economy.

State firms are the main beneficiaries of the existing currency regime, since they use the official rate of 6.4 kyat to the dollar. The unofficial exchange rate, which is used for transactions by most businesses, has hovered around 800 to 820 per dollar in recent months.

Bankers expect the new managed float system to produce a rate around that level.

“They (state firms) can get some subsidies from the government or some loans,” the central bank official said on the sidelines of a meeting of Southeast Asian officials in the Cambodian capital, Phnom Penh.

The impact of the currency change on inflation was expected to be small, he added.

He said full unification of Myanmar’s multiple exchange rates could take two to three years. (Reporting By Stuart Grudgings and Prak Chan Thul; Editing by Alan Raybould)

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