K10,000 Notes to Get a Makeover, CBM Move Stokes Inflation Worries

A new series of 10,000 kyat notes will be issued starting July 1, according to an announcement by the Central Bank of Myanmar (CBM).

The new notes have been designed to improve quality, raise security standards, and prevent counterfeiting, according to CBM.

A new shade of reflective green will be used for the numeral 10,000, a new watermark will be implemented, and a protective layer will cover the note.

The size and overall design will remain unchanged, CBM said. The current K10,000 notes, which were introduced in 2012, will continue to be legal tender.

CBM went through the same process when it modified the existing 5,000 kyat notes issued in 2009 to more durable ones. However, nowadays those notes are rarely seen.

However, some feared that the influx of cash will have an inflationary impact on the economy.

U Tin Than Oo, an economist and policy advisor, said, “Issuing new currency will not be good for us as we already have a big budget deficit. There will be inflation and the value of Myanmar currency will decrease more.”

The CBM introduced a managed float system for the first time for Kyat in April 2012. At the time of the float, exchange rate for Kyat stood at 815 for $1, which many experts said was too overvalued. However, rapid devaluation in the last nine months have slumped the exchange rate to about 1,165 for $1, wiping off about 43 percent of the currency’s value in only four years.

However, Sean Turnell, associate professor of economics at Australia’s Macquaire University and an expert on Myanmar’s economy, said he thinks the new currency note will not itself be inflationary.

“… all will depend on why it is being issued, what the extent of money financing of the budget deficit there will be. I am inclined to think the new note is not anything to worry about,” he told Myanmar Business Today.

“I am supportive of a lower kyat. This makes Myanmar more competitive in critical areas, and the movement downwards is still short of correcting a real appreciation of the kyat over the last few years. I would be inclined to let the market find a value for the kyat, free of intervention.”

Source: Myanmar Business Today

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