Mizzima
The Myanmar Central Bank issued a statement on 26 February rebutting rumours that 20,000 kyats banknotes will go on general release in March.
Previously, on 31 July 2023, the Central Bank issued a new 20,000 kyats banknote. However, news of its issue caused panic, a devaluation of the kyat on international markets and an increase in the price of gold. This led to the junta to announce that the new 20,000 kyats notes were a limited issue to commemorate the completion of a Buddha statue.
Until now, because the 20,000 kyats banknote is limited, the only way people could obtain a 20,000 kyats banknote was by taking old and damaged notes to a bank where they could be exchanged for a new 20,000 kyats banknotes. The bank would then destroy the old and spoiled money used to buy the new notes, meaning that the issuing of the new notes would not lead to an increase in the money supply.
Economic theory states that if governments print more money without an improvement in the economy it reduces the value of money. This is because there has been no increase in the goods available to buy but people have more money, creating a greater demand for a limited number of goods. So, the price of goods rises, leading to inflation.
The recent rumours that the new 20,000 kyats note would no longer be limited and go on general release led people to panic about inflation and caused the prices of cars and real estate in Yangon to rise over the last few days, according to brokers on social media. The value of the kyat against the US dollar also dropped.
