RANGOON — Gold prices have reached record highs as the value of the kyat falls and the price of the US dollar continues to increase, according to industry observers.
The value of gold on the domestic market reached a record high on Tuesday of 894,000 kyats (US$719) per tical—a traditional Burmese measurement of weight equal to16.33 grams (just over half an ounce)—higher than the record $714 per tical logged on Sept. 7. The price on the global gold market was $771 per tical (or $1,333 per ounce).
The Rangoon branch of the Gold Entrepreneurs Association said the high prices have convinced people to sell their gold items.
“Gold prices have increased because of the dollar’s appreciation in the domestic market. There has been no price fluctuation in the world’s gold market,” said U Win Myint, secretary of the Rangoon branch of the Gold Entrepreneurs Association.
U Kyaw Win, owner of U Htone gold smith echoed that Burma’s recent high gold price is not related to the global gold price but is a reflection of a high dollar exchange rate. “The dollar exchange rate is increasing, that’s why the gold price has reached a record high,” he said.
The value of US dollars has appreciated over the last few months and on Sept. 27 the exchange rate was 1,270 kyats per dollar on the informal exchange market and 1,245 kyats as traded by private banks.
The Central Bank of Burma rate stood at 1,240 kyats to the dollar, up from just 1,210 kyats on Sept. 1.
An official at the Central Bank said, “The bank’s policy regarding the exchange rate is to adjust it to the market rate. But, it is important that the market does not manipulate the prices, and the Central Bank should monitor and prevent that. Otherwise, the reference rate may even reach 1,300 kyats per dollar.”
There are reports that private banks and other exchangers have now stopped selling dollars to buyers.
“I’ve asked Yoma Bank, KBZ Bank, Ayeyarwady Bank and CB Bank exchange counters today to sell some dollars, but they all said they do not have enough dollars to sell,” Rangoon resident U Than Htike Oo told the Irrawaddy.
“I spoke to black marketers and they said the price reached 1,270 kyats per dollar because of high demand,” he said.
Economists have said that the dollar appreciation is attributable to currency speculators. “Money traders are speculating,” economist U Hla Maung, who is also the retired director of the Ministry of Commerce, told The Irrawaddy. “The dollar value has increased since the US signaled that it would end sanctions.”
The appreciation is also due to a decline in dollar inflow into the country as the country’s jade market is sluggish and the government has launched a crackdown on drug dealing, slashing the country’s foreign currency income, he said.
“The earnings from drug dealing have declined as [the government] has taken a tough line on drugs,” said U Hla Maung. “China is buying less jade so the dollar inflow into the country has decreased. Viewing the dollar as a commodity, the supply is low and the demand is high. So, the prices have increased.”
“Those who previously bought gold as an investment have now started to save dollars instead. And those who traded on the [Yangon] Stock Exchange also started to save dollars after stock prices declined,” he added.
Economist Dr. Aung Ko Ko said that the value of the kyat has now decreased in relation to both gold and dollars and that it is time for the government to find a solution. “Due to the exchange rate increase, the cost of importing is high. Exporters may be happy for now, but how can they survive when the import value continues to rise,” he said.
“The exchange rate is changing very quickly, so the government should find out which factors are pushing up exchange rates and then find a solution,” he added.
