UPDATE 1-Myanmar to set kyat at 820 per dollar-bank officials

By Yantoultra Ngui, Mon Mar 19, 2012 11:16pm EDT ...
 

* Official rate of currency is just over 6 per dollar

* Myanmar plans managed float system, bank officials say (Adds details, quotes, background)

KUALA LUMPUR, March 20 (Reuters) - Myanmar's central bank aims to set the exchange rate of the kyat at around 820 per U.S. dollar, close to its black market rate, as the nation pushes ahead with economic reform, two officials with private Myanmar banks said on Tuesday.

The officials, who were speaking at an industry event in the Malaysian capital Kuala Lumpur, told Reuters the new "managed float" system would have a trading band of plus or minus 2 percent.

"We are currently in the auction process, and there is a plan to manage the float of the currency at 820 kyat, plus or minus 2 percent, to one U.S. dollar," said Aung Kyaw Myo, an official of Kanbawza Bank Ltd.

Officially, one U.S. dollar buys a little over six Myanmar kyat. Unofficially, it is around 800 kyat.

A central bank official said last week that the government plans to hold trial foreign exchange auctions in March before floating the currency from April 1, the start of the 2012/13 fiscal year.

The float would mark the most substantial economic reform yet by Myanmar's new government and coincides with political reforms that are ending half a century of isolation in the former British colony also known as Burma.

Rona Rakhit, head of Business Development and Strategic Initiatives of the Co-operative Bank Ltd, the second-largest private bank in Myanmar, said at the Kuala Lumpur event that 11 out of the 19 private banks in the country are participating in the auction process. The country hopes to unify its dual exchange rates by the end of April, he added.

The central bank official said that the government had calculated the national budget for the year from April 1 using an exchange rate of 800 kyat per dollar, which is around where the black market rate has been in recent weeks.

Since 1977, the kyat has been pegged to the International Monetary Fund's (IMF) special drawing rights, with one dollar equalling 6.4 kyat.

The kyat's unofficial rate, used in most transactions, has jumped from more than 1,000 per dollar in 2009 as foreign money has flowed into the timber, energy and gem sectors. That has hurt a swathe of Burmese, from farmers and manufacturers to traders and employees of foreign firms paid in dollars. (Additional reporting by Niluksi Koswanage:; Editing by Stuart Grudgings)

http://www.reuters.com/article/2012/03/20/myanmar-currency-idUSL3E8EK0P220120320?rpc=401&feedType=RSS&feedName=rbssFinancialServicesAndRealEstateNews&rpc=401