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The foreign-exchange market is a devilishly difficult place to turn a profit. Massive and closely watched, edges are impossible to maintain. Most FX traders lose money. So Banyan was impressed to encounter one Myanmar-based punter who, with just a few years’ experience, has managed to produce 22% returns trading the volatile, illiquid kyat, the local currency. Or, rather, he would be impressed—were this upstart trading against counterparties who had any say in the matter.
In the 12 months ending in June, the Tatmadaw, the army that overthrew Myanmar’s elected government in 2021, earned Ks6.4trn ($1.8bn) from the FX market, according to a recent analysis by Jared Bissinger, a Burma-watcher. These proceeds, bigger than the military budget, were not the fruits of market nous. Instead, they were stolen from Myanmar’s exporters through a system of rigged exchange rates.
The scheme works like this: Burmese exporters earn revenue abroad in foreign currency and must book profits in kyat. Exporters would prefer to swap to kyat at the prevailing market rate (about 4,400 kyat per US dollar), but since 2022 have been...