Kyat Slumps Against the Dollar

By Myo Pa Pa San 28 June 2018

YANGON — The kyat-dollar exchange rate has weakened by more than 50 kyats so far in June, and the Central Bank of Myanmar expects it may soften further.

The reference rate of the Central Bank has increased by 51 kyats from K1344 per US dollar since June 1 to K1395 on Thursday (June 28).

Director-General Daw May Toe Win of the Reference Exchange Department of the Central Bank told The Irrawaddy yesterday that the rate — K1380 per US dollar on Wednesday — would likely further weaken.

And it did, rising by 15 kyats to K1395 per US dollar on Thursday. Meanwhile, the selling rate in the market is around K1404 per US dollar.

“According to our analysis, the currencies of our trading partners have depreciated more than our currency has. The policy of the United State is the most important factor. As it has increased its interest rate by 0.25 percentage points, its currency has appreciated, and the currencies of others have depreciated. Its currency is strong,” Daw May Toe Win said.

The exchange rate has been weakening since the second week of June, said dollar dealers, who blame several factors including the Central Bank’s elevated reference exchange rate, a decline in the gold price in the international market, manipulation in the domestic market, and the saving of dollars by potential outbound travelers, plus unconfirmed reports that ministries have been forced to find foreign currency themselves.

“China has devalued its currency. As a result, the currencies of its ASEAN trading partners have also declined,” foreign currency dealer U Moe told The Irrawaddy.

“The exchange rate may continue to weaken if the World Bank and the Central Bank of Myanmar do not intervene,” he said.

As the country’s exports are low at present, the higher rate for kyat-dollar conversion will lead to higher commodity prices, exporters said.

Currency dealer U Khin Maung Win also mentioned online gambling as a possible factor as the World Cup 2018 is currently being played in Russia.

Translated from Burmese by Thet Ko Ko.