RANGOON — Local business leaders sounded alarms and requested the government take action in the currency market to slow down the rising US dollar exchange rate.
Exchange rates have risen continuously since early November, and on Wednesday, the official Central Bank of Myanmar rate reached 1,305 kyats per dollar. The gap between official and black market rates also widened, with the black market trading at 1,353 kyats per dollar.
“We’re afraid to start work these days, because the dollar exchange rate is rising incredibly. If we purchase goods from warehouses, we must pay high prices. We think it’s better to wait and see what will happen,” said U Myo Min Aung, vice chairman of the Myanmar Retailer Association.
Importers in Burma are suffering over the rising dollar, and they’re especially concerned about daily commodity prices.
“We can’t sell our products at low prices after we buy them at the higher exchange rate,” said U Myo Min Aung. “So commodity prices will stay high even after the dollar rate starts to go down. That’s why this is a really dizzying time for us.”
“I just want the government to get involved in this important issue,” he added.
Since September, when the dollar rate was 1,215 kyats, it has trended slightly higher. But starting in early November, the rate has risen more dramatically, sometimes by as much as 20 kyats per day.
“The gap between the market rate and the Central Bank rate is now getting bigger, and that’s a problem,” said U Zaw Lin Htut, chief executive officer of Myanmar Payment Union.
“If foreign currency reserves are too low to inject into the market, then the government should consider issuing USD bonds, and attracting more foreign institutional investors,” he said.
Several factors, including an import/export imbalance, internal conflicts, and a drop in gas export earnings, are hurting the Burmese economy right now, he added.
“The price of rice is dropping. And due to the oil price drop, our gas export income is affected. The FDI side also is not growing much, I think, due to internal conflicts,” he said.
As the dollar value rises worldwide, it impacts many countries. But that impact can be more severe in Burma, where trade and monetary policies are less stable.
“Other countries also feel an impact, but they are not as badly affected, because they have more production, and their exports are bigger than imports,” said U Zaw Lin Htut. “All government ministries need to consider coordinating with the Central Bank now.”
U Than Lwin, a former Central Bank senior officer and a current consultant to KBZ Bank, echoed those sentiments.
“Up and down fluctuations in the market are normal, but the problem is these recent ups and downs are happening so fast. It shouldn’t be like this. This is not normal. Someone is playing with the market,” he said.
Now is the right time for the government to solve the unstable exchange rate problem in Burma, he added.
“The Central Bank should announce to the public how they are working on this. And the Ministry of Planning and Finance, the Commerce Ministry, and the UMFCCI should work together for a solution,” he said, referring to the Union of Myanmar Federal Chambers of Commerce and Industry.
U Than Lwin added that the Central Bank should develop a better long-term monetary policy, and not just seek short-term treatment for its recent problems.
The latest black market dollar exchange rate is at its highest point since 2011, when the civilian government took over from the military regime. The highest ever rate occurred in 2007, during the Saffron Revolution, when it reached 1,400 kyats per dollar.