August 19, 2016

Narrowing the gap Official dollar exhange rate moves closer to market price

A man counts US dollars and Myanmar kyats at a money changer in Yangon.
A man counts US dollars and Myanmar kyats at a money changer in Yangon.

The gap between official and market exchange rates for the U.S. dollar narrowed Friday in Myanmar, with currency traders selling the greenback slightly above the Central Bank reference rate of K1,285, market sources said.
The average market price dropped to around K1,290 on Friday, compared to K1,300 on Thursday, the sources said.
The CBM set the rate at K1,283, K1,275 and K1,266, respectively, on Thursday, Wednesday and Tuesday.
Since the dollar’s bounce back against the kyat beginning 10 August, the central bank began a move to bring the official price closer to market value.
In a recent interview with Myanmar News Agency, CBM Deputy Governor U Set Aung said the central bank is taking measures to prevent exchange rate fluctuations between the kyat and the dollar in the market.
Following China’s yuan devaluation, currencies of most countries have dropped against the dollar, including significant declines in the Indonesian Rupiah and Malaysian Ringgit, the deputy governor said, adding that the kyat was also affected.
According to sources, a bounce back in the value of the dollar against the kyat coincided with China’s move to devalue its currency last week, as the market value and official rate were close during the period from 20 July to 10 August.
U Saw Naing, who has written a number of monetary policy articles under the pen name Saw Naing, echoed the CBM’s position, telling The Global New Light of Myanmar that the jump in the dollar-kyat conversion had accelerated since the devaluation of the yuan.
Another factor for the dollar’s recent surge against the kyat is frequent rumours and market manipulations by those seeking to benefit from chaos in the country, the economic analyst said.
However, he reiterated the dollar’s bounce back against the kyat was likely to be short-lived.


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