October 1 (Reuters) – As Myanmar’s economic crisis worsens after the February military coup and parts of its financial system crumble, many residents of the conflict-torn country are turning to online groups to bypass the official channels and exchange currencies.
The fragility of the financial system was further exposed this week when the kyat currency fell to new lows after the central bank gave up trying to support it. Many licensed money changers and gold shops closed in the turmoil that followed.
Online groups, which operate primarily on Facebook, have become a way for buyers and sellers of currencies to connect, often relying on trust when organizing physical exchanges of notes.
âI posted to sell old tickets yesterday in the group,â said May Lay, a Yangon resident, referring to what she said was selling around $ 190 in kyat on a Facebook group.
âI lost my job and haven’t had any income recently. Life is difficult with a one-year-old,â she said, noting her household food expenses had doubled.
In the months immediately following the February 1 coup, long lines of people lined up to withdraw money from banks, although recently kyat savings have been getting harder and harder. affected, with the currency losing 60% of its value against the dollar in September.
Speaking after the World Bank warned this week that the economy could fall 18% this year, ruling military council spokesman Zaw Min Tun said on Thursday that the central bank had not been able to meet local demand for dollars.
One of the largest groups established on Facebook, called “Dollar Buyer Seller Direct”, had around 170,000 members, with the group administrator warning users to be careful before making a deal.
“The seller, the buyer, both assume their responsibilities,” he warned.
The group appears to have been dismantled in recent days, although at least one other site has emerged to replace it.
In Myanmar, money traders are supposed to be licensed to operate. Central bank officials did not respond to requests for comment.
Asked about such sites using his platform, Rafael Frankel, Director of Emerging Markets Public Policy, Facebook Asia Pacific, said: âOur dedicated team, including regional experts, continue to monitor the situation in Myanmar in real time and we will take action on anything that violates our policies as soon as we become aware of them. “
âOur hearts are with the people of Myanmar at this difficult time,â Frankel said.
However, with some exchange bureaus shutting down and official exchange rates now well outside market rates, more and more people have been drawn to online sites to complete their own transactions, which are done in person. .
“It’s like a black market. Both sides have to worry until the deal is done,” said Ye Yint Tun, 33, who became an unofficial currency broker after losing his job. real estate agent for expatriates.
While he initially charged a 20% fee, he has now reduced it to 2% to make it more attractive and estimates that he earns around 10,000-20,000 kyat per day, or around $ 4 to just over $ 8, based on recent exchange rates.
“There is a risk that you will be stolen while trading. So we have to be very careful.”
Online groups also exploit the flow of money sent by foreign workers to neighboring countries like Thailand.
“Millions of dollars are smuggled into Myanmar from Thailand every day,” said an unlicensed Thailand-based money trader, pointing out that the estimated four million Burmese workers in Thailand must return money to members. of their family.
âWe use Facebook as a platform to sell money,â said the trader, who declined to be named.
Myanmar workers in Thailand pay traders with their income in Thai baht, who in turn give kyat to their family members in Myanmar and use the baht to buy US dollars.
Another Thailand-based trader described how US dollars were smuggled into Myanmar by land, sometimes hidden in clothing or household items.
âIn September alone, I traded around 30 million baht ($ 890,000). Trade is much higher than in previous months,â the trader said.
($ 1 = 33.7800 baht)
(Reuters staff report written by Ed Davies edited by Robert Birsel)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.