Myanmar’s military regime has seen an improvement in its financial situation due to efforts to conserve and access foreign exchange, though this comes at the cost of increased military action, continued trade restrictions, and a depressed economy.
Myanmar Regime’s Forex Situation Improves
For much of its rule since the 2021 coup, the State Security and Peace Commission (SSPC) military regime, formerly known as the State Administration Council (SAC), faced foreign currency shortages. However, over the past year, these constraints have eased, and the depreciation of the Myanmar kyat in the informal hundi market has slowed – an indicator of reduced scarcity.
Since the coup, the SAC/SSPC experienced significant forex shortages, driven by factors including lower aid and foreign direct investment (FDI) inflows, though actual in-cash FDI inflows have fallen less than reported approved FDI figures. Exports declined in 2021 but reached record highs in 2022 before falling again. Sanctions also disrupted forex access, and a lack of faith in the financial system led many citizens to move money out of kyat and into foreign currency, gold, and property.
The SAC/SSPC implemented measures to conserve and tap new sources of foreign exchange. These included strict trade licensing, capital controls on remittances, reduced spending on forex-heavy areas, and reduced provision of forex at official exchange rates. The regime also compelled migrant workers to remit 25% of their income through official channels and required exporters to convert foreign exchange earnings to kyat.
In 2024/25, the regime’s forex challenges eased due to increased inflows and decreased demand. Migrant worker remittances increased by 46% to US$2.1 billion, driven by heightened pressure on migrant worker agencies and a narrower gap between official and hundi rates. Aid following Myanmar’s 2025 earthquake also increased inflows. The regime enforced forex repatriation requirements, revoking registrations of nearly 200 exporters that did not repatriate earnings.
The SSPC also depressed demand for foreign exchange by reducing imports through trade licensing, border closures, and new border trade licensing requirements. A weak domestic economy also limited demand.
The improved forex situation has allowed the SSPC to increase procurement of fuel and military equipment, including munitions and drones. Drone attacks and airstrikes reached an all-time high in 2025.
Trade restrictions reduce imports, which in turn reduces investment and hurts consumers. Restrictions on essential items like pharmaceuticals have a direct cost for human health and well-being. However, the improved forex situation is linked to a decision in January 2026 to reduce the share of forex compulsorily converted to kyat to 15% of export proceeds, down from 25%, benefiting exporters. The regime also made forex available for LNG purchases, resulting in the return of a Hong Kong-based power provider, VPower, and the resumption of stalled power projects, which would raise electricity supply. Exchange rate stability also improved, providing predictability for some businesses.
The sustainability of the regime’s improved forex situation remains uncertain. Rumors of foreign powers or illicit funds affecting the situation have circulated, and concerns exist that an appreciating currency, combined with high inflation, could challenge export-oriented sectors. Despite these questions, the SAC/SSPC and any succeeding regime will likely benefit from the improved forex situation, at least for some time.
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