The economic crisis in Myanmar has deepened with the kyat plummeting in value past the 4,000 per US dollar mark recently.
The fresh slump comes as the dollar surges on the global exchange market and after the junta reportedly abandoned the fixed rate of 2,100 kyats per dollar.
Other Asian economies are also suffering fallout as the dollar soars, but the impacts are far worse in a Myanmar battered by years of instability and economic woes compounded by the 2021 coup and military rule.
The kyat’s value on the open market has plummeted from 3,900 per dollar before the Thingyan Festival in mid-April to 4,100. Private banks have meanwhile set a rate of around 3,800 kyats for Myanmar exporters and importers.
Under the elected National League for Democracy government, the rate stood at 1,300 kyats per dollar. The military takeover in February 2021 plunged Myanmar into a dollar crisis as sanctions, withdrawal of foreign investment, declining exports, and fighting in border trade zones took their toll.
In April 2022, the junta-controlled Central Bank of Myanmar (CBM) introduced a fixed exchange rate of 1,850 kyats per dollar. Four months later, it adjusted the rate to 2,100 kyats per dollar. The average exchange rate in the open market was around 3,500 kyats throughout 2023.
In December, the CBM announced it would no longer set rates on its online foreign exchange trading platform, allowing authorized banks to set their own rates.
The CBM has adopted the unofficial exchange rate of around 3,010 kyats per dollar since Thingyan, according to market sources.
Private banks buy the greenback from service companies and sailors at 3,350 to 33,80 kyats per dollar, and export earnings at 3,660 to 3,670 per dollar, according to a money changer.
“The rates have changed, but not officially. I think the regime has issued only internal orders to [private] banks [about the rates]. Banks are now buying and selling dollars by referring to market rates,” he told The Irrawaddy.
A businessman in Yangon confirmed the change in rates.
“Around the end of April, hotels began charging at an exchange rate of around 2,900 kyats per dollar,” he told The Irrawaddy.
Over the past three years, the CBM has frequently changed its rules on foreign currency earned by exporters, requiring them to exchange a certain percentage of their dollar earnings at the official rate. The latest order in March required exporters to sell all their foreign currency income to authorized dealers.
Exporters still have to exchange 35 percent of their export earnings at 2,100 kyats per dollar, and 65 percent at the rate set by private banks, said a businessman who spoke to the Irrawaddy.
However, it is unclear at what rate the CBM is selling dollars to importers for fuel, cooking oil, and medicines, according to the business community.
Previously, exporters could sell a certain percentage of their export earnings to importers of fuel, cooking oil and pharmaceuticals at the market rate.
The strong dollar and the weak kyat are pushing up the price of basic commodities every week, according to Yangon residents. Prices of consumer goods have tripled since the coup.
“If I buy an item for 100 kyats today, its price will be 150 kyats in three or four days time,” said one Yangon consumer.
