Foreign Exchange Market Reform since 2011: Linkage between the Official and Unofficial Markets

  • Koji KuboEmail author


Foreign exchange policy reform since 2011 has undergone highly visible changes. One is exchange rate unification in a move to a managed float. Another is the licensing of authorized dealer banks and their customer dealing, wherein private exporters and importers can officially avail themselves of currency exchange. Nonetheless, low turnover in the official market suggests prevalent informal currency deals. To see the linkage between the newly launched official market and the unofficial market, we evaluate the impact of the official foreign exchange auction on the unofficial exchange rate using a GARCH model. Empirical results imply that the foreign exchange auction as an intervention instrument has only modest impacts on the unofficial market, despite its considerable costs in terms of the central bank’s international reserves.


Exchange rate unification Unofficial forex market Managed float Foreign exchange auction 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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