Burma

Kyat Value Looks Poised to Increase, Observers Say

By Kyaw Hsu Mon 5 February 2016

RANGOON — Burma’s currency has seen a turnaround in value since the new Parliament convened on Monday, a trend experts say is set to persist.

Starting early last year, the kyat’s value took a hit due to a trade deficit, an unstable political environment and the strong value of the US dollar in the world market—in January 2015, there was a 30 percent slide in the value of the kyat against the dollar. Now that trend seems to be changing.

“Although the exchange rate has fallen since the beginning of this month, the value of the kyat has increased. We’re waiting to see if the rate falls again,” said a currency exchange broker in Rangoon Division’s Pabedan Township, referring to the slip in the exchange rate relative to the dollar from 1,300 to 1,270 kyats, according to Central Bank data.

But compared to last year, Burma’s exchange rate has actually increased—early 2014 had a rate that hovered around 1,100 kyat. Key factors that influence Burma’s exchange rate are the country’s political transition and the fact that the Central Bank controls market prices.

“This is good sign for us. I think the Central Bank is controlling the rate to reduce it gradually as it fixes its policies. The rate is still increasing, but it should go down soon,” said Win Myint, chairman of the Myanmar Petroleum Distributors Association, adding that a lower exchange rate is more beneficial when it comes to ramping up imports.

“As long as the government doesn’t control the exchange rate, the value of daily commodities will continue to go up,” he said. “The International Monetary Fund is meeting with some businesspersons as well as helping the Central Bank. That’s why I think the Central Bank is working on new policies now to control the currency exchange rate.”

“We’re concerned that some speculators might try to play the market. Regulators, and even the new government, are important for helping to control this,” Win Myint added.

In early October, the World Bank forecast a slowdown in economic growth for the 2015-16 fiscal year, due in part to torrential flooding last year and a lack of new investment.

Myo Min Aung, vice chairman of the Myanmar Retailers Association, said that the exchange rate must be such that it works easily for both importers and exporters.

“The kyat value should continue to go up, it should continue to increase and eventually stabilize for businesspersons. If we’re able to get a steady currency exchange rate, as some neighboring countries have done, we’ll see economic growth,” Myo Min Aung said.

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