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Unofficial Forex Market and Informal Economic Activities under Exchange Restrictions on the Private Sector

  • Koji KuboEmail author
Chapter

Abstract

Exhaustive exchange restrictions affected the private sector in two ways. First, they segmented the forex market further into several parts, which led to multiple exchange rates within the unofficial market. Second, the stringent restrictions with weak enforcement eventually stimulated informal economic activities, including trade settlement diversion and smuggling, both of which were underpinned by the informal money transfer system. Our qualitative analysis unveils the diversity in informal currency deals. Some were motivated by official uses, and their prevalence added to the liquidity of the unofficial market. Others were motivated by informal economic activities including smuggling and the remittances of irregular status migrant workers; informal currency deals would persist along with the underlying informal economic activities.

Keywords

Multiple exchange rates Trade settlement diversion Informal money transfer U.S. economic sanctions 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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