RANGOON — A continued resurgence of the US dollar and a widening trade deficit has seen the kyat hit a new low on the exchange market.
The exchange rate rose 8 percent in the last two months, from 970 kyats per dollar mid-September to 1048 kyats on Wednesday, according to the Central Bank of Myanmar
“It is related to the increased strength of the US economy, but there is also the issue of the imbalance in [Burma’s] imports and exports,” economist Maw Than told The Irrawaddy.
Since Oct. 28 last year, the US dollar has risen 7.9 percent against the currency benchmark known as the US Dollar Index, according to Bloomberg.
Burma’s trade deficit for the first six months of the fiscal year, from April to September, was US$3 billion.
Exporter Hnin Oo told The Irrawaddy that the weakening kyat was positive for export sales but gave no net benefit, as many businesses depended on imported goods for their product lines.
“When we only look at the export sector, it can give a positive effect, but exporters living locally still need to buy imported things. So it’s nothing special for us.”
He added that most businessmen wanted long-term stability in exchange rates to guard against uncertainty and fluctuating prices.
Maw Than has cautioned against the Central Bank taking aggressive action to stabilize exchange rates.
“If the Myanmar Central Bank had large reserves of US dollars like the Chinese central bank, it could sell them in the market [and maintain a constant exchange rate],” he said. “But the Myanmar Central Bank doesn’t have many US dollars to sell in the market—if they increased their selling, it would lead to a dangerous situation.”
The Ministry of Commerce has reportedly said that it plans to address the trade deficit and take measures to gradually increase the exchange rate.
