There has been a sudden surge in the value of the dollar against the Myanmar kyat (MMK), which has fallen consistently against the U.S. currency since the coup on Feb. 1, 2021.
A foreign exchange broker told RFA one dollar bought MMK2,400 on Tuesday from MMK2,000 a few days earlier.
Compare that with the Myanmar currency’s value on the day before the coup when a dollar was worth MMK1,340, according to a person who exchanged kyat for dollars at a private bank.
Gold has also been surging since the coup, with 24 carat ‘Academy’ brand gold selling for MMK2.1 million per 16.606 grams, according to a gold shop owner who declined to be named for safety reasons. In April last year the same amount of gold cost MMK1 million.
Chairman of the Myanmar Gold Entrepreneurs Association, Myo Myint, said high demand and hoarding had driven up the price.
However, the main reason for the sudden jump in the price of dollars and gold is more to do with the Central Bank of Myanmar (CBM) which has set the official price of U.S. $1 at MMK1,850 and made it harder for companies and individuals to hold the U.S. currency..
“It is indirectly related to the dollar price set by the Central Bank,” said a businessman, who spoke with RFA on condition of anonymity.
“Although the world gold price is falling, the domestic dollar is rising, therefore the price of gold is rising. This is happening because people want to buy dollars in a hurry. Dollars are being purchased [to pay for] imports and dollars are being purchased locally to pay foreign loans.”
Last week the central bank told businesses and individual borrowers to put foreign loan repayments on hold in an attempt to protect its foreign exchange reserves. Banks licensed to deal in foreign currencies were asked to tell customers with foreign debt to adjust their repayment schedules.
Myanmar companies have at least U.S. $1.2 billion in outstanding dollar debt, according to recent Bloomberg data.
The central bank also said last week that companies with up to 35% foreign ownership had to convert their foreign currency holdings to kyat.
The kyat lost 60% of its value in the first seven months after last year's coup. The local currency’s drop came in spite of the central bank selling U.S. $144.8 million between Feb. 3, and Sept. 15, 2021, according to the Myanmar Now website.
The kyat’s fall has pushed up food and gasoline prices, putting further strain on the lives of locals. Inflation is forecast at 8% this year, according to the Asian Development Bank, which would be the highest in Southeast Asia. Gross domestic product is expected to contract by 0.3% in 2022, the ADB said. That would be the worst performance in the region and the only contraction among the 10 ASEAN nations.