Scarcity of dollar

Traders have complained on the hardship in exchanging the kyat into US dollar, prompting the Central Bank of Myanmar’s scrutiny into the ‘irregularity’.

Some traders said that US dollar is only available in the black market as domestic banks and official currency exchange counters with licences from the central bank have stopped selling the currency.

Ko Thiha, a trader at Yuzana Plaza and Mingalar market, said: "It’s been a month since I bought dollar at the government’s official exchange counters. Today, I went to those counters but they did not sell the currency. They said they had nothing to sell. There are many exchange counters near Yuzana Plaza and Mingalar market but I could not buy dollar from them or any banks."

He speculated that big banks are manipulating the market on purpose. Ensuring the scarcity of the US dollar will only drive up demand for the greenback and the exchange rate.

Than Lwin, a senior adviser to the Kanbawza Bank, said: "We have to buy dollar from others for reselling. But how can we do that when we cannot buy the currency anywhere?"

An importer said: "When I went to the private exchange counters to buy dollar, they had stopped. Then I went to a bank but it was unsuccessful. I had to buy dollar on the street at a higher price."

On May 25, private banks’ exchange counters bought dollar for Ks1,089 and sold it for Ks1,091, when the official exchange rate was set at 1,082 per dollar.

On the street, the buying/selling rates were higher, at 1,125 and 1,127.

An official from the CBM’s foreign exchange management department said: "Fluctuation in the exchange rate is common. But now the fact that the exchange counters don’t sell dollar is irregular. It’s against the market mechanism. They will have to buy and sell dollar at the appropriate prices. But now, they keep dollar in their hands without selling them."

The official noted that the greenback is apparently being hoarded on anticipation that its value would rise further against the local currency.

"We will scrutinise it," said the official.

The dollar was mostly stronger against other Asia-Pacific currencies yesterday. It has been underpinned by expectations the Federal Reserve will raise interest rates in the coming months - a view supported by comments from its chief Janet Yellen who said Friday she expects a hike "at some point this year". Traders are awaiting the release of key US data this week including revised economic growth for the first quarter and durable goods orders.

Myanmar’s central bank adopted the managed float system in April 2012 and announced the official exchange rates on the daily basis. It granted exchange licences to private banks in September 2011 and granted authorised dealer licences to non-banking institutions in December 2012 to run counters.

The CBM said there is no limit to how many exchange licences that can be issued.

Licences have been issued to two state-owned and 21 private banks. There are 563 exchange counters.