MYANMAR'S military government asked the public sector to stop using dollars for domestic payments in an effort to reduce the use of foreign currencies in the country.

The Central Bank of Myanmar sent a notification on Wednesday (May 25) to all ministries, provincial governments and municipal bodies to use only kyat, the national currency, for domestic consumption and payments of government agencies and enterprises. Deputy Governor Win Thaw told the ministries and local authorities to report to the central bank about the circulation of the instructions among respective departments.

"Kyat must be inevitably used in domestic payments but we've found out that the US dollar is being used in some hotels, restaurants, international schools, souvenir shops and lease of properties to foreigners," Win Thaw said in a statement. He added that government agencies are also using dollars in some of their activities, including land leases, capital investments for insurance businesses and income from joint ventures.

The use of foreign currencies in payments for goods and services within the country will lead to higher demand for dollars and cause exchange rates to fluctuate, the financial authority said. Last month, the central bank mandated local holders of foreign currencies to exchange them for kyat within one working day of receiving them, but later exempted most foreigners and some traders from the order after international pushback. BLOOMBERG