Dollar to Kyat exchange rate reached 1,005 due to the reduced supply of dollars from the Central Bank of Myanmar for private banks, the stagnating economy, and political instabilities.
Normally, the exchange rate tends to fall after the monsoon season. However, it has risen this year and is likely to increase even more, experts estimate.
“The Central Bank is not selling us the amount we need,” says a high-level official from Myanma Apex Bank.
Usually, the Central Bank sells US$ 10 million to private banks daily, but it is now selling only one-fourth of the original amount, a businessman says.
“The economy doesn’t look good. Rice and bean exports are at a halt, but imports have been increasing. There is a lot of demand for dollars in the market, so the price is rising,” another businessman concludes.
Up to October 17th, exports amounted US$ 6,000 million and imports reached US$ 9,000 million, resulting in a trade deficiency of US$ 3,000 million.
Usually, the dollar exchange rate will rise with political instability or sluggish economy in the country, U Bo Bo Kyaw Nyein, a monetary observer says.
U Bo Bo Kyaw Nyein further points out that he American economy is recovering now, so the dollar value has been on the rise in the global market.
Currently, tensions have been rising among Myanmar leaders; progress in peace and ceasefire work does not seem positive; and a common goal is missing.
Furthermore, the economy is likely to fall until the end of 2015, so the dollar exchange rate is likely to continue to rise, according to experts.
On October 27th, the selling price for dollars at the banks was 1,006 Kyats per dollar and the buying price 995 Kyats per dollar.
After U Thein Sein became president, the dollar exchange rate was set up at 885 Kyats per dollar since October 2012. The exchange rate reached 1,005 Kyats per dollar at the end of October this year.
According to studies by the World Bank, inflation in Myanmar stands at 7 percent. The organization recommends it not go beyond 10 percent.