RANGOON — An already-unstable exchange rate dropped again this week in the local market due to less demand, a change observers attributed to uncertainty ahead of Burma’s presidential nominations in Parliament.
While the Central Bank’s rate remains at 1,230 kyats to one US dollar, the unofficial rate on the local market has dropped from 1,240 to 1,210 kyats.
The exchange rate peaked at 1,310 kyats in late December and early January. Though the rate had stabilized between 1,280 and 1,300 kyats for around two months, February saw an increase in fluctuation.
“This rate is really unstable, that’s why people don’t want to buy or sell any more. Businessmen are waiting to see what happens in the coming week during the changing of the new government,” Soe Thein, senior executive director of Asian Green Development Bank, told The Irrawaddy.
“It’s hard to predict whether the dollar rate will drop again or not. It totally depends on the political situation,” he said.
Since a new car import policy was announced on Dec. 15, the official exchange rate set by the country’s Central Bank has climbed to 1,307 kyats per dollar, while black market traders have been offering prices of around 1,315 kyats.
The rate is the highest since the aftermath of the 2007 Saffron Revolution, when unofficial currency exchange operations were offering around 1,400 kyats to the dollar.
Pe Myint, a consultant with Cooperative Bank, said that the dollar exchange rate has dropped continuously since mid-February and he expected that it may drop to 1,200 kyats and then stabilize.
“Actually 1,300 is really high, it should be stable at around 1,200,” he said.
“It totally depends on the political situation and whether there will be an announcement for the nomination of vice presidents on March 10. It’s so close, and this is directly affecting the exchange rate,” Pe Myint explained.
The Central Bank is selling over ten million US dollars to private lenders daily, according to banking industry sources. Recently, the Central Bank told lenders that it will take control of the exchange rates. The decrease in the dollar’s value globally also reportedly played a role in the decision.