The Myanmar Central Bank (UCB) shooting incident was a terror attack carried out against the Myanmar central bank’s headquarters in Naypyidaw, Myanmar on November 9, 2018. The attack was carried out by a group of Rohingya Muslim insurgents known as the Arakan Rohingya National Front (ARNF). The attackers were believed to have been planning to storm the Bank of Myanmar and shut down the financial system in order to force the government to implement a hard currency conversion policy. The ARNF’s motives were not known as of November 10, but the group has been linked to the Rohingya insurgencies against the Myanmar government in Rakhine State and the Kachin Independence Army in Northern Myanmar.
The Myanmar government has repeatedly denied Rohingya insurgents from other ethnic groups were involved in the attack on the bank. The government blamed the ARNF for the attack in an attempt to justify tighter border controls and confiscate the group’s assets in Northern Myanmar. However, the ARNF denied the allegations and blamed the Myanmar government for the violence. The ARNF’s actions have set off a new wave of forex-rule backlashes in Southeast Asia as several countries have banned the use of the Rupiah in Myanmar as a result of the attack.
The Myanmar Central Bank Shooting
On November 9, 2018, six gunmen wearing Myanmar Army uniforms and motorcycle helmets stormed the headquarters of the country’s central bank in the capital of Myanmar’s westernmost Rakhine State, sparking an hours-long gunbattle with security forces. The group subsequently escaped the scene on motorbikes and later abandoned them in a jungle near the border with Bangladesh.
No casualties were reported among security forces during the gunfight, which has been described as a “battle of the bulge” due to the large number of Myanmar Army soldiers involved in the attack. The attackers were believed to have infiltrated Rakhine State from Bangladesh.
Forex-Rule Backlash Emerges
The security forces’ rapid action led to a sharp decline in the value of the Rupiah over the next few days as traders feared the outbreak of a full-blown conflict between the two nations. The forex-rule fallout from the attack has been extensive, with several countries imposing restrictions on the use of the Rupiah in their financial systems in an effort to curb capital outflows.
The following day, the Rupiah plummeted by as much as 12% against the dollar as investors began to withdraw funds from foreign exchange markets in response to the forex-rule fallout. Over the next two days, the Rupiah further fell by another 10%, before stabilizing at around 6% against the dollar.
Myanmar Government Denies Rohingya Insurgency Role
On November 10, 2018, Myanmar’s President U Htin Kyaw addressed the nation following the shootout at the bank and said the insurgents were “terrorists” and “militants” and that “we will never negotiate with terrorists.” He also called on the international community to “deal with national terrorism through the appropriate legal mechanisms.”
However, a day later, Senior Advisor to the President for National Security and Chairman of the State Affairs Council of the Myanmar BMA Ie May Min lauded the insurgents as “freedom fighters” and said their actions were “an example of the ethnic cleansing of Rohingya Muslims.”
Myanmar Central Bank Shooting: How This Affects Forex
The forex-rule fallout from the attack has complicated the financial markets in Myanmar, as several Asian and Southeast Asian countries have yet to adopt forex-rule-compliant trading systems. As a result, the Rupiah has been particularly volatile, increasing in value by as much as 12% against the dollar on November 11 and 12, before trending lower the next day.
The Rupiah has now shed about 60% of its value against the dollar since the onset of the Rohingya crisis in August 2017, as the country struggles to cope with the worst refugee crisis since World War II.
Myanmar Forex-Rule fallout
The Rupiah’s volatile price movements have led to widespread concerns about the health of the Thai and Indonesian currencies, which have also been hit by forex-rule fallout.
A fall in the value of the Rupiah against its major trading partners has led to a fall in the value of Thailand’s and Indonesia’s currencies, further exacerbating forex-rule backlash in South-east Asia.
Additionally, the forex-rule fallout has triggered a selloff in the Thai and Indonesian stocks, which have since fallen by around 7% and 5%, respectively. The NSE50 Index, which provides a benchmark for the country’s top stocks, has also fallen by as much as 9%.
The forex-rule fallout from the Myanmar Central Bank shooting has dented the confidence of investors in the Rupiah and led to a selloff in the Thai and Indonesian currencies. This has further triggered a selloff in the Thai and Indonesian stocks, further hurting investor sentiment.
As forex-rule backlashes continue to spark in South-east Asia, investors are advised to stay cautious about the investments they make.
As forex-rule backlaces continue to spark in South-east Asia, investors are advised to stay cautious about the investments they make.
Investors are advised to stay cautious about the investments they make and the currencies they hold as forex-rule backlaces continue to spark in South-east Asia.