By HEIN KO SOE | FRONTIER
YANGON — An investigation into currency market manipulation briefly focused on Telenor and Ooredoo, a law enforcement official has confirmed, after the mobile operators both purchased large amounts of US dollars.
A senior official from the Bureau of Special Investigation’s Yangon office told Frontier it investigated the companies on October 4. Both operators provided documents showing that they had bought the currency to purchase equipment from abroad, the official said.
“Telenor and Ooredoo bought a large amount of foreign currency from a private bank for importing telecom accessories,” the official said. “There was no evidence that they were engaged in any illegal currency trading.”
However, the request for information highlighted how “thin” Myanmar’s currency markets are, particularly at times of uncertainty when there is often a reluctance to sell dollars. A single large transaction can cause the kyat to appreciate or depreciate by a significant amount, several sources have told Frontier.
The BSI official said that to fulfil the order from the mobile operators the private banks had to buy US dollars from informal brokers operating out of Shwe Bon Thar Street in downtown Yangon. “These currency purchases created a lot of demand in the market,” he said.
At the time of the transactions BSI was already investigating suspicious activity in the foreign currency and gold markets. In the first three weeks of September, the kyat lost nearly 7.5 percent against the US dollar, even as the dollar was weakening against most major currencies.
On September 21, government spokesman U Zaw Htay told reporters that the authorities suspected traders were manipulating the market.
On the orders of the President’s Office and Ministry of Home Affairs, the BSI – an agency focused on economic crime – began investigating the following day and arrested eight people. This seemed to have an instant effect, with the kyat strengthening several percent, even as the US dollar lost ground against major currencies.
By September 24, BSI had detained more than 10 traders and brokers who operate from Pabedan Township’s Shwe Bon Thar Street, which is the heart of Yangon’s informal finance markets. Of these, five are expected to face charges under the Foreign Exchange Management Law for allegedly running an exchange business without a licence, BSI director U Aung Myo told Frontier on October 5.
“We found that the market has been behaving unusually because some people have been trying to manipulate it,” Aung Myo said. “They’re doing this not only for their business but also political reasons.”
Ooredoo Myanmar said in a written statement the company had an “ongoing need to access US dollars”, particularly when importing materials from outside Myanmar. Given its revenues are in kyat, it is in Ooredoo’s interests to keep its costs in the local currency as much as possible, the statement said.
“We only deal with authorized licensed banks when converting Myanmar kyat to USD, in order to make these payments,” it said. “It is in the interest of Ooredoo Myanmar just as it is in the interest of the Myanmar economy, that there be a stable kyat with access to a liquid supply of US dollars from the authorised licensed banking system. The recent currency fluctuations and lack of US dollar availability are not helpful to our business or to a growing economy.”
Mr Glenn Mandelid, head of corporate communications at Telenor Myanmar, said the company’s financial transactions are for “operational purposes only”.
“[T]his does not involve any currency speculation,” he said. “All financial transactions are done through the banking system in accordance with Myanmar bank regulations.”