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September 12, 2022

Overview of Myanmar’s 2022 Foreign Currency Restrictions and Exchange Requirements

Throughout 2022, the Central Bank of Myanmar (CBM) has implemented a series of rules surrounding the compulsory conversion of foreign currency balances in the country. This began on April 3, when the CBM issued a notification directing foreign currency holders in Myanmar to convert their foreign earnings into Myanmar kyat (MMK), within one day, at the official exchange rate. Since then, the CBM has issued further clarifications and instructions for banks authorized to handle foreign currency, responded to some concerns from foreign investors by exempting certain foreign investment projects from the conversion requirement, and relaxed the currency conversion requirements for trade at the Chinese and Thai borders. The process has not been without some trial-and-error as well, with the CBM walking back some exemptions after they were enacted.

Foreign investors and business owners, both in the country and abroad, have raised concerns about this centralized control of foreign currency flow and the depletion of foreign currency in Myanmar’s business community. To help readers understand the sometimes-surprising moves by the CBM over the past months, this article will summarize the key developments in the CBM’s efforts relating to foreign currency conversion.

Establishment of Compulsory Exchange Requirement

On April 3, 2022, the CBM issued Notification No. 12/2022 and Directive No. 4/2022 requiring nearly all individuals, companies, and other organizations in Myanmar to convert foreign-currency income received from abroad to MMK within one working day of receipt. These requirements took immediate effect for all transfers and applied retroactively to foreign currency balances already in the country. All authorized dealer (AD) banks (i.e., those licensed to exchange foreign currency) were instructed to convert foreign currency held in the foreign currency accounts of “internal residents”—which included locally registered companies, organizations, and offices; Myanmar branches of foreign companies; and individuals residing or established in Myanmar for at least 183 days (excluding foreign diplomatic staff and foreign civil servants).

Additionally, foreign-currency transfers out of Myanmar must now be performed through AD banks with the permission of the government’s Foreign Exchange Supervisory Committee (FESC).

Under these rules, the conversions are to be made at the official exchange rates set by the CBM. When the notification and directive were issued, the official rate for US dollars was USD 1 to MMK 1,850. However, on August 5, 2022, the CBM increased this official exchange rate to USD 1 to MMK 2,100.

Early Clarifications

These announcements caught many by surprise, so the CBM clarified the foreign currency conversion requirements by issuing further details on April 5, 2022. Directive No. 5/2022 exempted the union government and ministries from the requirement, and Directive No. 6/2022 spelled out instructions for AD banks. The directive makes AD banks responsible for handling the conversion process by requiring them to:

  1. transfer the amount in question to the concerned company’s account;
  2. convert the amount to MMK at the CBM exchange rate; and
  3. deposit it in an MMK-denominated account.

The conversion process must be carried out within one working day of receiving export earnings, other earnings (including from services), or foreign currency investments (excluding foreign currency allowed by the FESC). AD banks must also perform additional checks in the conversion process for loans for investment and unilateral transactions.

Exemption for Foreign Investments and Border Trade

As the extent of the foreign currency conversion requirements became clear, foreign business groups and embassies in Myanmar issued letters to the Myanmar government noting the challenges these measures posed to foreign investors and urging exemption for foreign investments. In acknowledgement of the importance of international investment in the country, the CBM issued the requested exemption for certain foreign direct investment (FDI) projects.

The changes came on April 20, 2022, with Letter No. FE 1/69, which specified that the foreign currency conversion requirements in CBM Notification No. 12/2022 do not apply to:

  • FDI businesses holding a permit from the Myanmar Investment Commission;
  • direct investment businesses located in Special Economic Zones;
  • diplomats, family members of foreign embassy personnel, those with diplomatic relations with Myanmar, and members of the diplomatic missions of foreign embassies in Myanmar;
  • employees of the United Nations and Myanmar citizens holding laissez-passer who are employed at missions of the United Nations and its specialized agencies in Myanmar;
  • foreign employees of development agencies carrying out aid activities in Myanmar;
  • foreign employees with diplomatic status from international organizations, international NGOs, and development agencies; and
  • Myanmar state-owned airlines or airlines owned by Myanmar citizens.

Following the positive response to these exemptions, the CBM issued a further relaxation on April 26, 2022, for exporters and importers conducting trade at the China-Myanmar or Thailand-Myanmar border. This CBM directive (No. 7/2022) extends the currency conversion (THB-MMK or CNY-MMK) deadline to one month, meaning that foreign currency obtained from border trade with Thailand or China no longer has to be converted into Myanmar kyat (MMK) within one day. After export earnings flow into an exporter’s account at an AD bank, the exporter can use the foreign currency as desired or sell it to the bank at the official exchange rate within one month. After one month, any unused balance remaining will be sold to the bank.

In addition, the CBM issued Notification No. 36/2022 to clarify its foreign currency conversion requirement for exporters. The notification specifies that only 65 percent of income received from exportation needs to be converted into MMK within one day. An analysis of the regulations laying out the currency conversion requirements mentioned above suggests that the remaining 35 percent of export earnings balance will be converted into MMK if exporters do not use it within 30 days.

Foreign Exchange Supervisory Committee

The FESC supervises not only the flow of foreign currencies for domestic and foreign investment, manufacturing, exports and imports, and service businesses (including education- and health-related initiatives), but also other duties relating to foreign exchange management as assigned by Myanmar’s State Administration Council (SAC). While the FESC was established on April 4, 2022, to approve foreign currency conversion under the country’s new policy, the formation of the FESC was made official with the May 13, 2022, publication of the SAC’s order (No. 28/2022) appointing six ministers and other government officials to the new committee.


The restrictions on foreign currency and compulsory exchange policy represent momentous shifts for businesses operating in Myanmar, and they have taken shape around the same time as several other significant transitions in Myanmar’s financial regulations. Some of the prominent changes in the financial sector include the change of the fiscal year (to April 1–March 31 from the previous October 1–September 30), and the promulgation of major budgetary and financial planning laws for the 2022–2023 fiscal year.

This volatility could continue for some time due to global financial pressures, the economic impact of COVID-19, and other domestic and international geopolitical circumstances. Businesses with operations, interests, or significant currency balances in Myanmar should therefore pay close attention to these financial and currency-related developments, and maintain readiness to act promptly as the situation merits.

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