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Piecemeal Reforms in the 1990s and Forex Market Segmentation between State and Private Sectors

  • Koji KuboEmail author
Chapter

Abstract

Myanmar’s unofficial forex market stemmed from piecemeal reforms during the initial stage of its transition from a planned to a market-based economy. While partially liberalizing international trade by the private sector, the government left intact the overvalued official exchange rate and the central administration of foreign exchange allocation in the state sector. All foreign currency deals made by the private sector took place outside the official system at unofficial exchange rates. As a result, the foreign exchange market was segmented into two parts—the private sector with unofficial market rates and the state sector with the official exchange rate. After a failed attempt to devalue the official rate using foreign exchange certificates in the 1990s, the authorities did not recognize the free market exchange rate, which spurred the unregulated development of the unofficial forex market.

Keywords

Burmese way to socialism Transition Market segmentation Foreign exchange certificate Myanmar 

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Copyright information

© IDE-JETRO 2018

Authors and Affiliations

  1. 1.Institute of Developing Economies, Japan External Trade Organization (IDE-JETRO)ChibaJapan

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