CNI News 

7 August 2022 

According to Myanmar economic analysts, the exchange rate of 1,850 kyats fixed by the Central Bank of Myanmar has been increased by 2,100 kyats, which may lead to an increase in foreign dollar exchange rates. 

In addition to the dollar price, other commodity prices will also rise, said U Ne Win Soe, in charge of the Ayeyar Trading Center, to CNI news agency.  

He said, “Increasing the dollar price was not good. In addition to not being able to control the dollar price, the difference between the external price and the internal price has now become so significant to the point that 1850 is now2400/2500 in the outside dollar price. There is a huge gap between them. Now it has been put up to 2100 which means the outside dollar price will also shoot up. Then the rest of the prices will go up. This is just another form of inflation,” he said. 

All the export earnings from exportation originally had to be exchanged with the exchange rate set by the Central Bank. However, starting from August 5, only 65% of the export earnings were made mandatory to be exchanged in Myanmar Kyat.

 while seeing Myanmar Central Bank (GETTY IMAGES)

However, A Burmese economic analyst, who did not want to be named for security reasons, told CNI that since there has been no announcement how to manage the remaining 35% and how it can be done, we must monitor it and that the dollar price in the market could fluctuate based on the process to allow the issuance of 35 percent. 

He said, "65 percent has to be allocated for the import that they specified. The remaining 35 percent can be sold to an importer of your choice. But the statement did not say what the 35 percent would be allowed to do. Do you have to keep the 35 percent in the bank without transferring it immediately? Do they let us keep it in the bank and transfer the account? Or do they allow cash dollars? The follow up did not clear anything.

What will hit the market depends on it. That 35 percent is not allowed to be cashed out, but if the importer is allowed to trade, then the importer does not have to look for it in the outside market anymore. The search in the market will decrease. If the importer's demand in the foreign market has decreased, the dollar price will fall again.

 But that's not the case, if the dollar is allowed to be issued, the issued dollar will go to the market and the dollar price in the market will fall. These are from the declination point of view. Even the central bank went up and down from 1850 to 2100. There is a question whether the market will follow or not," he said. 

U Thant Zin Tun, a corn trader, told CNI News that since the Central Bank has changed the set rate from 1,850 kyats to 2,100 kyats per dollar, exporters will increase the price when they buy goods from farmers.

 while seeing an export and import business at the port (AFP)

U Thant Zin Tun said, "I think that the dollar price, which is currently rising, may fall again from the huge gap between 1850 and the outside dollar price. And the exportation has also become consistent with the dollar price which means we can get it at a slightly higher price in our local range. 

Then, only 65% can be deposited. Since it is only 35%, we can see this as good. We used to pay 100% and sell it again. That system has now shifted and now only 65% can be imported. It’s only 35% from exportation which gives us discretion for what we want to import.

 In this way, it is said to be good since we can import the important things now such as medicine from other countries.

 The Central Bank of Myanmar controls foreign currency but it cannot sell the dollar which is much-needed in the market, leading to the emergence of dollar black markets. In addition, it has been reported that medicine, food, consumer goods, agricultural equipment, raw materials, and imported goods purchased with dollar are now on the increase. 

The current foreign exchange rate in the foreign market is from more than 2500 to 2800 Burmese dollars for 1 US dollar. Businessmen are also speculating that $1 may rise to 3000 kyats. However, the financial market experts have explained that their process of trading outside is actually a form of buying and selling as they like.