Due to the Military Council's heightened demand for US dollars, there has been a recent surge in the value of the currency. This development has prompted economists and businessmen to caution about the potential reoccurrence of high prices for essential goods and commodities.
The domestic price of the US dollar has witnessed an increase from approximately 2,800 Kyats per US dollar in the third week of May to around 2,960 Kyats per dollar at present.
Economists explain that the increasing demand for foreign currency in the Military Council's export and import sector is the main reason behind the higher price of the US dollar.
Based on data from the Military Council's Department of Trade, during the financial year 2022-2023 until March, the export sector generated slightly over 16.6 billion US dollars. However, the import sector incurred expenses of over 17.3 billion US dollars. When comparing the import and export sectors, there is a deficit of over 700 million US dollars.
An economist explains that the ongoing increase in the US dollar price is a result of the Military Council's deficit in the export and import sector. Given the current circumstances, there is a possibility of encountering high domestic prices once more.
"We can't send goods out of the country. The amount we bring in is $800 million less than what we spend, at least until the second week of May. They want to show a surplus, but the truth is we keep having a deficit that keeps getting bigger. This means there's a lack of dollars available in the market."
Furthermore, he emphasized the need for the Military Council to take measures to stabilize the US dollar price. He highlighted that even a slight increase in the US dollar price in the market can have an impact on domestic products.
"But it doesn't end there. The prices of goods made within the country are also going up. Now the US dollar holds even more significance. This is something that affects regular people. If the value of the US dollar continues to rise, the first group to feel the impact will be those who earn a fixed income. They will be the first to face difficulties, which makes this a major problem. So there are numerous consequences."
According to a businessman interviewed by Than Lwin Times, the increasing value of the US dollar could potentially impact the import sector. This, in turn, may result in higher prices for consumer goods.
"Currently, it's not the season for exporting goods. However, imports are still taking place, and fertilizers and fuel have a small effect. The imports will continue as planned. Even if the price of the US dollar increases, they will sell their goods at the higher price. The fluctuation of prices is not the main concern. If the prices rise or fall too drastically, it can cause market instability. Since we cannot react immediately, it is important to maintain stability."
The price of the US dollar in the market is on the rise due to the school opening period. There is a significant demand for US dollars from individuals attending domestic international schools, those planning to study abroad, as well as those who need US dollars for overseas travel.
"In the past, we used to import goods only 3 months ahead, so it didn't have a significant impact. But now, what will we do with imports during this time? If the prices increase too much, importers will wait for the US dollar to fall before making new imports. A substantial rise in the dollar price will not heavily affect exports and imports. And the local markets won't be greatly affected. However, in the consumer goods market, prices may rise slightly."
On May 26, the Central Bank of the Military Council made an announcement stating that it will keep the reference foreign currency exchange rate unchanged to stabilize the price of the US dollar. Additionally, the Central Bank expressed its plan to enhance the availability of foreign currency cash by increasing its sale through the exchange counters of banks.
Businessmen have expressed their concerns that the official foreign exchange rate of 2,100 kyats per dollar announced by the Military Council is not effectively implemented. They have faced difficulties in purchasing enough foreign currency at the designated places, leading them to resort to the outside market where they have to pay higher prices.
Following the military coup d'état in Myanmar, the exchange rate between the Myanmar kyat and the US dollar has experienced significant fluctuations. Prior to the coup, under the NLD government, the exchange rate was around 1,300 Myanmar kyats per US dollar. However, since then, the exchange rate has more than doubled, leading to daily price volatility. Additionally, the demand for US dollars has continued to rise in the country.
