Burma currency trading resumes as t

[FreeBurma@xxxxxxx]

Subject: Burma currency trading resumes as traders released

RANGOON, July 16 (Reuter) - Trading in the Burmese kyat resumed late on
Wednesday after the military government released some dealers from
questioning over the currency's recent fall. 

The kyat, which has plummeted nearly 46 percent this month, firmed to 230 per
dollar-denominated foreign exchange certificate (FEC) after a trading
interruption of nearly two days, dealers said. 

On Monday, the last day of trade, it was quoted around 270 to the FEC. 

Trading was brought to a halt when the State Law and Order Restoration
Council (SLORC) picked up head traders late on Monday to question them about
the plunge, witnesses said. 

Some illegal FEC and dollar traders were also detained, they said. 

``They were just called in for questioning about the prevailing situation and
some have already been returned to their homes,'' a military official told
Reuters. 

The FEC was introduced in February 1993 mainly so that foreign tourists would
not have to buy the currency at its overvalued official rate. 

As of Monday, the kyat had plunged nearly 30 percent in a week and almost 46
percent since the beginning of the month. It was trading at around 270 to the
FEC late on Monday compared to 210-211 on July 9 and 185 in the last week of
June. 

In the official exchange market, which is rarely used, the kyat was quoted
unmoved at around six to the dollar. 

The sharp plunge in the kyat against the FEC was due to a lack of confidence
in the currency, the government's decision to open FEC-denominated letters of
credit and rumours of a possible change in the monetary system, local
analysts said. 

A senior general denied the rumours. 

``Unscrupulous persons are spreading rumours in Yangon (Rangoon) that the
monetary system will be changed after Myanmar (Burma) becomes an ASEAN
member,'' state-run newspapers quoted SLORC Secretary One, Lieutenant-General
Khin Nyunt, as saying. 

Burma is due to become a member of the Association of South East Asian
Nations (ASEAN) later this month. 

Khin Nyunt said other false rumours included talk that FECs would be
withdrawn from circulation and that foreign exchange deposited in banks would
be seized by the government. 

``The rumours about financial and economic matters...are utterly untrue and
have merely been concocted by destructionists,'' he was reported on Wednesday
as saying. ``Don't believe the rumours spread by the destructionist
elements.'' 

The government had implemented a new measure that caps the amount of FECs
that can be transferred abroad at $50,000, bank officials said on Wednesday. 

Analysts said the measure should help stem the growing demand for FECs and
help stabilise the currency. 

``One major drawback in our FEC system was allowing importers to transfer
money abroad by buying FECs with local currency,'' one analyst said. 

The sharp drop in the kyat has caused prices to skyrocket over the past few
weeks. Some shopkeepers said they had stopped selling wholesale goods in kyat
because of the rapidly changing value. 

``We don't want to change the price tags all the time to adjust with the
galloping rate,'' one store owner said. ``If they (locals) pay in FECs it is
all right.'' 

Since it became legal to exchange FECs for kyat, a growing number of ordinary
Burmese residents have been buying FECs as they lose faith in the kyat,
analysts said.  

07:33 07-16-97