Kyat weakens as fundamental problems exist
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The Myanmar kyat hit Ks1,041 against the US dollar on Wednesday, sharply above the official rate of 1,027, according to money exchangers.
The Central Bank of Myanmar’s official rate for the day was Ks1,027 per dollar, but the currency was actually sold at 1,041. Buying rate was 1,038.
Since the beginning of this year, the official rate was at 1,025 per dollar until January 22 when the greenback weakened slightly to 1,024. From January 27 to February 9, the official rate was 1,025 per dollar. During February 10-24, it was 1,026. The rate was adjusted upward to $1,027 on Wednesday and it stayed unchanged today.
At foreign exchange booths, the buying rate of dollar was 1,028 and the selling rate was 1,026 in the first week of February. In the second week, the rates went up to 1,033/1,030.
The dollar has moved up against the local currency compared to the rate in January, given widening trade deficit.
Myanmar’s main foreign exchange income is through the exports of primary natural resources and tourism industry. The country’s manufacturing industry is now at its infancy stage, still controlled by small and medium-sized companies which have no resources to improve their production technology.
Myanmar is trading with its partners – China, Thailand, Singapore, Japan, Malaysia, India, South Korea, Indonesia, the United States, Hong Kong, Germany and the United Kingdom – both through borders and sea lanes.
Chief export products include agricultural produce, animal and fishery products, mineral extractions, forest products and industrial finished products while imports include merchandise for investment, raw materials and commodities.
The Ministry of Commerce’s data showed that Myanmar’s international trade is on the rise. Trade value is expected to top US$25 billion before the current fiscal year ends March 31.
Between April 1 and February 6, the country spent US$13.8 billion on imports and earned $9.6 billion from exports resulting in deficit of $4.2 billion. Last fiscal year, the deficit was $2.6 billion. And many experts believe this year the country will suffer a record trade deficit.
A Lower House Public Joint Committee’s report on the first half-year budget turnovers, released recently, also showed that trade deficit may lead to currency slide and export incompetency.
The committee’s report urged the government to find ways to cope with the rising trade gap in terms of market-based economic strategies as it could hinder foreign investment flow.
In addition, it was suggested that state budget also needs review and the governmental organisations should be scrutinised to find out if there are any leaks.
