Dollar appreciation continues
On April 28, when the official exchange rate was 1,075 per dollar, dealers quoted the selling rate at 1,090. On the following day when the official rate went up to 1,078, the selling rate accordingly rose to 1,093. As the official rate edged up to 1,080 s
"The way I see it, those who have extra cash lying around exchanged kyat for dollars is one of the reasons (for the rate hike)," economist Myint Thaung said.
"Another reason is the increase in the usage of dollars in the service Industry. The other reason is that the dollar is becoming more and more reliable as a currency. These can be the reasons for the recent rise of the dollar. There can be many other reasons that we do not know about."
Since the start of the year, the dollar has appreciated by 5.37 per cent against kyat, based on the official exchange rate that strengthened from 1,025 on January 1 to 1,080 on May 7.
At the end of 2011 and the beginning of 2012, the exchange rate was 824 per dollar. It hit 845 in November 2012. The rate was 976 in November 2013. Last October, the greenback first rose above 1,000 against kyat.
As of May 6 when the official rate was 1,080 per dollar, authorised dealers sold a US dollar for 1,107 and quoted the buying rate at 1,098. The buying and selling rates for Singapore dollar and euro were 815/828 and 1,199/1,235, respectively.
The stronger dollar is a challenge to Myanmar, which relies heavily on imports. According to the Commerce Ministry’s data, Myanmar is likely to suffer a record trade deficit of $5 billion for fiscal year 2014-15 which ended on March 31.
“Inflation could rise in line with the dollar appreciation,” economist Soe Thein said. "Right now there are no official announcements from the government or the central bank regarding this issue. Outside sources only know from looking at the rough data."
