June 22, 2015 1:00 am
The official reference rate was adjusted to a new record low at 1,110 per US dollar on June 19. It weakened from 1,105 which stayed unchanged from June 5 through June 18.
From 1,026 at the end of 2014, the kyat has weakened by 7.21 per cent.
Selling rates are reportedly above 1,200 kyat per dollar. Importers have complained against the depreciation. Auto sale agents in Myawady said that this month, the price of a vehicle imported from Thailand was jacked up by Ks1 million to cover the depreciation.
The outcry prompted Lower House speaker Thura Shwe Mann to announce on his Facebook page on June 16 that parliament will keep an eye on speculators who are involved in the currency black market.
Many people in Myanmar took to Facebook on June 10 to discuss the recent rise in the value of the US dollar.
"The actual problem of the dollar hike is our inability to manage money laundering, as well as dollar purchasing made by some conglomerates. The worst are people who play the black market at Shwebontha Street in central downtown Yangon. Investigators should monitor that location and find out why and how people are buying US dollars and arrest them for creating black market. But the authorities are not arresting anyone because, I think, the people who are speculating in the currency exchange market must be close to the authorities. Some speculators might get arrested when pressure rises from higher levels of authority," said Facebook user Ko Zay Yar in a comment on the parliament speaker's page.
The speaker responded that this is good to know, and he will inform the authorities to watch for such behaviour.
Facebook users Ko Chin, Ko Tun and Nyunt Aung said money laundering is at the root of the dollar hike, and it needs to be eliminated.
The kyat has weakened by 26 per cent since Myanmar introduced a managed float in 2012 to try to end the disparity between official and unofficial exchange rates. The move was the first significant economic reform by a semi-civilian government that took office a year earlier.
But the gulf between unofficial and official rates has again widened, with dollars in short supply as Myanmar’s imports outpace exports.
The foreign currency sales started on Wednesday with the aim of easing pressure on importers of fuel and edible oil, the state-owned Global New Light of Myanmar newspaper said, citing deputy central bank governor Set Aung.
The state-run Myanma Economic Bank and Myanmar Investment Bank would begin selling foreign currency on Monday, it said.
Foreign currency trading is permitted within a range of 0.8 per cent above or below the official reference rate. Trading outside that band could result in the loss of foreign exchange licences.
There are about 20 local private banks and around 200 money changers holding licences. Foreign banks cannot offer foreign exchange services.
Private banks regularly put in orders for around $20 million at the central bank’s daily dollar auction, but it typically sells only $300,000 to $500,000.
Several unlicensed dealers were detained last week in a bid to halt black market transactions. The kyat weakened to 1,300 a dollar on June 10 but gained strength when news of the arrests slowed unofficial trade, dealers said.
Myanmar’s foreign trade has grown quickly but, as imports outpaced exports, its trade deficit jumped 88 percent to $4.9 billion in the fiscal year that ended March 31, according to official data.
A rise in foreign investment, tourism and remittances from overseas workers have helped plug the gap but dollars remain in short supply and the greenback’s rise against emerging market currencies in general has exacerbated the kyat’s weakness.
Sean Turnell, an expert on Myanmar’s economy at Sydney’s Macquarie University, said measures to support the kyat were "self-defeating".
"Where the problem comes in is via the efforts to artificially hold up its value," said Turnell.
"All they really do is add fuel to the idea that there might be a shortage of forex, undermining confidence in the kyat and Myanmar’s financial arrangements broadly."
The Central Bank of Myanmar has started unrestricted sales of foreign currency at its own specified rate to help importers hit by exchange rate fluctuations over the past two weeks.
The official reference rate was adjusted to a new record low at 1,110 per US dollar on June 19. It weakened from 1,105 which stayed unchanged from June 5 through June 18.
From 1,026 at the end of 2014, the kyat has weakened by 7.21 per cent.
Selling rates are reportedly above 1,200 kyat per dollar. Importers have complained against the depreciation. Auto sale agents in Myawady said that this month, the price of a vehicle imported from Thailand was jacked up by Ks1 million to cover the depreciation.
The outcry prompted Lower House speaker Thura Shwe Mann to announce on his Facebook page on June 16 that parliament will keep an eye on speculators who are involved in the currency black market.
Many people in Myanmar took to Facebook on June 10 to discuss the recent rise in the value of the US dollar.
"The actual problem of the dollar hike is our inability to manage money laundering, as well as dollar purchasing made by some conglomerates. The worst are people who play the black market at Shwebontha Street in central downtown Yangon. Investigators should monitor that location and find out why and how people are buying US dollars and arrest them for creating black market. But the authorities are not arresting anyone because, I think, the people who are speculating in the currency exchange market must be close to the authorities. Some speculators might get arrested when pressure rises from higher levels of authority," said Facebook user Ko Zay Yar in a comment on the parliament speaker's page.
The speaker responded that this is good to know, and he will inform the authorities to watch for such behaviour.
Facebook users Ko Chin, Ko Tun and Nyunt Aung said money laundering is at the root of the dollar hike, and it needs to be eliminated.
The kyat has weakened by 26 per cent since Myanmar introduced a managed float in 2012 to try to end the disparity between official and unofficial exchange rates. The move was the first significant economic reform by a semi-civilian government that took office a year earlier.
But the gulf between unofficial and official rates has again widened, with dollars in short supply as Myanmar’s imports outpace exports.
The foreign currency sales started on Wednesday with the aim of easing pressure on importers of fuel and edible oil, the state-owned Global New Light of Myanmar newspaper said, citing deputy central bank governor Set Aung.
The state-run Myanma Economic Bank and Myanmar Investment Bank would begin selling foreign currency on Monday, it said.
Foreign currency trading is permitted within a range of 0.8 per cent above or below the official reference rate. Trading outside that band could result in the loss of foreign exchange licences.
There are about 20 local private banks and around 200 money changers holding licences. Foreign banks cannot offer foreign exchange services.
Private banks regularly put in orders for around $20 million at the central bank’s daily dollar auction, but it typically sells only $300,000 to $500,000.
Several unlicensed dealers were detained last week in a bid to halt black market transactions. The kyat weakened to 1,300 a dollar on June 10 but gained strength when news of the arrests slowed unofficial trade, dealers said.
Myanmar’s foreign trade has grown quickly but, as imports outpaced exports, its trade deficit jumped 88 percent to $4.9 billion in the fiscal year that ended March 31, according to official data.
A rise in foreign investment, tourism and remittances from overseas workers have helped plug the gap but dollars remain in short supply and the greenback’s rise against emerging market currencies in general has exacerbated the kyat’s weakness.
Sean Turnell, an expert on Myanmar’s economy at Sydney’s Macquarie University, said measures to support the kyat were "self-defeating".
"Where the problem comes in is via the efforts to artificially hold up its value," said Turnell.
"All they really do is add fuel to the idea that there might be a shortage of forex, undermining confidence in the kyat and Myanmar’s financial arrangements broadly."
Myanmar Kyat Exchange Rate
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