As politics shift in Myanmar, so do economics
People wait to change money at a money changer center in Yangon on April 2, 2012. Today, Myanmar began a managed flotation of its currency.
Stacey Vanek Smith: Myanmar's foreign minister announced that historic elections in the country have gone smoothly, including apparent victories by pro-Democracy candidates. Also this morning, Myanmar's central bank floated the country's currency for the first time.
Here to explain is Sean Turnell of Macquerie University in Sydney. Good morning Professor Turnell.
Sean Turnell: Good morning.
Smith: Myanmar's going through a lot of political changes, obviously. But it's also going through a currency change today. Tell us, if you will, what's going on.
Turnall: Well, the move today to float the currency and go to one unified exchange rate really is a very important one. Myanmar has long had a terribly divided exchange rate system. It's also an extraordinary vehicle for corruption, and is generally, I think, just a symbol of the irrationality that has sometimes been there in the economy.
Smith: Tell me what the country's currency situation has been like -- because it's a little different.
Turnall: Up until recently, Myanmar has had a dual exchange rate system, where it's had an official exchange rate of 6 kyat -- the name of the country's currency -- to $1 U.S. Whereas in the marketplace, that kyat is actually exchanged at up to around 1,000 to $1 U.S. So we've had two extraordinarily different rates: the official rate, which has really only ever been able to be used by very senior officials and generals in the past regime; and then that market rate, which has been more or less available to everyone else.
Smith: And one final question: how will this affect Myanmar's economy. It sounds like you think it will help it?
Turnall: I think it'll affect it in profound ways. It will inject, I think, a degree of rationality into a system that has sometimes lacked that. It'll be important, I think, in sending a signal to international investors and traders, that perhaps Myanmar is now open for business. And then finally, it will greatly improve the country's public accounts -- its internal revenues -- by making sure that the country's export earnings are properly recorded.
Smith: Sean Turnell is an expert in Myanmar's economy. He joins us from Macquerie University in Sydney. Sean, thank you.
Turnall: Thank you.