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Southeast Asia, explained

The other historic development in Myanmar? A sane currency policy

How stabilizing the kyat could translate to an economy boom.
Myanmar kyat currency 2012 4 2Enlarge
MYAWADDY, MYANMAR: A Burmese man counts banknotes at the market in Myawaddy province. (PORNCHAI KITTIWONGSAKUL/AFP/Getty Images)

April 1 was a day surrounded with great fanfare over the looming ascent of Myanmar's democracy heroine Aung San Suu Kyi to parliament. In Myanmar (also called Burma), the election day brought on joyful tears and outsized dreams that, at long last, prosperity could return to the long-suffering nation.

But that wasn't the only hugely significant development in Myanmar that day.

On April 1, as the country headed to the polls, the government floated the kyat.

In English: it attempted to make sense of its chaotic currency rules, which had fixed the national currency -- the kyat -- at an absurdly high rate.

A yawning gap has separated the official value and the true value, determined by the black market. Prior fixed government rate? Six kyat. Black market rate? Between 800-850 kyat. That's a difference of more than 13,000 percent.

Though this development lacks a powerful narrative and a Nelson Mandela-caliber protagonist, it's equally significant and may actually do more to lift the Burmese out of poverty. It helps normalize Myanmar's economy, encourages growth and helps welcome back skittish foreign investors.

That could translate into jobs and, when it comes to commerce and trade, less corruption. Reuters calls it "the most dramatic economic reform" by the post-junta government yet.

It's not without risks: foreign investment speculation could cause sudden inflation. But that's preferable to a fixed currency system that's fundamentally dishonest and rightfully intimidating to investors.

http://www.globalpost.com/dispatches/globalpost-blogs/southeast-asia/the-other-historic-development-myanmar-sane-currency-poli