Despite the junta’s intervention, the exchange rate has plunged to 4,800 kyats per dollar, and the price of gold has rebounded to over 5.8 million kyats per tical (16.33 grams) for 24K gold.
One of the factors at play is an increase in the gold price in the international market, which jumped from US$2,332 per ounce in the last week of June to $2,379 in early July.
Meanwhile, public trust in private banks has declined since the regime announced it was punishing major private banks that it said had violated regulations governing the provision of home loans earlier this month.
As many people rushed to withdraw their deposits, private banks were forced to impose daily withdrawal limits to prevent bank runs, which has further worsened the crisis.
People who have withdrawn deposits from banks are investing in gold and the dollar—another factor in the surge in gold prices and weakening of the kyat.
Last month, the regime arrested and investigated dozens of well-known gold dealers, gold shop owners and currency dealers for allegedly manipulating the market after the kyat plunged to an all-time low and the price of gold hit its highest peak ever in the country.
The probe came after the gold price hit a record high of over 5.8 million kyats per tical, up from 1.3 million kyats before the coup in 2021. The kyat hit a record low against the US dollar, falling to 5,020 to the greenback. The kyat is now trading at about 4,500 to the dollar. In January 2021, the month before the coup, it was trading at about 1,300 to the dollar.
Despite the junta’s intervention, the kyat has plummeted to more than 130 per Thai baht and over 600 per Chinese yuan. The exchange rate was 120 kyat to a baht, and 610 kyat to a yuan last week.
A currency dealer in Yangon told The Irrawaddy on Thursday: “Dollars were out of stock yesterday. Previously, the dollar would get weaker when gold prices in the international market increased. But today, both the dollar and gold are going up. As public trust in banks has declined, people are investing in the dollar and gold. These factors have led to a gold price increase and weakening kyat.”
Myanmar faced the same situation after the coup triggered a banking crisis in 2021. But this time, the increased gold prices in the international market have compounded the impact, said a business owner.
One business owner said: “As banks have tightened limits on withdrawals, people are buying gold with the money they have withdrawn from banks for fear that the kyat will further lose its value. So, gold prices have surged. People were worried when the regime said it would take action against banks. Their worries are reasonable, as the country is ruled by a group of wild men whose only solution to problems is to arrest people and seize property.”
Gold prices have rebounded to 5.8 million kyats per tical, up from 5.7 million kyats last week.
Many gold and currency dealers have gone into hiding for fear that the regime may arrest them again.
A gold dealer said: “Gold shops have to sell at the reference rate set by the regime. They are only selling smaller jewelry items, not bigger ones. Those who were summoned for investigation last month have not yet been completely released.” He explained that over 20 gold dealers and brokers remain under partial detention. They are allowed to go to work in the morning, but are required to return after 6 p.m. to the military intelligence office, where they have to spend the night.
