by May Oo
YANGON, Nov. 18 (Xinhua) -- Myanmar economists have made an urgent call for finding ways to stabilize the recent volatile U.S. dollar exchange market of the southeast Asian country.
The U.S. dollar exchange rate with Myanmar's local currency kyat, which started to increase again in August, hit the highest since the country liberalized the foreign exchange market in 2012.
According to Thursday's market survey, 1 U.S. dollar was sold for 1,300 kyats but bought for 1,298 kyats at the official rate, while 1,315 kyats per U.S. dollars for selling and 1,309 for buying at the market rate.
Meanwhile, the reference rate of the Central Bank of Myanmar (CBM) was 1,290 kyats per dollar.
The CBM prescribed that local banks and currency exchange counters can play the rate 0.8 percent higher or lower from the CBM's reference rate. However, the market indicates the country's huge demand for U.S. dollar.
Myanmar has adopted a market-oriented economic policy without control. The only way the government can do with the depreciating currency is to find the root of the causes, U Ye Min Oo, a member of economic consulting committee of the ruling National League for Democracy, told Xinhua Thursday.
The CBM conducted U.S. dollar auction to local banks every day and has established an inter-bank foreign exchange market in order to support the market.
However, some local private banks refuse to sell dollars for local demand and do buying only to avoid the risk of losing interest while the invisible hands of black market are taking advantages of market instability with speculations.
"The local banks require more modernized banking techniques and that is why the interbank foreign exchange market still does not succeed," U Mya Than, retired chairman of local private Myanmar Oriental Bank, commented.
The CBM has warned the local private banks against making more speculations in local foreign exchange market in October.
According to the local experts, the reason lies in a huge trade deficit as the country depends heavily on the import of household products and capital goods.
The country's trade deficit reached 1.993 billion U.S. dollars in the first seven months of the 2016-2017 fiscal year as of Nov. 4.
Daw Naing, a housewife, said the price of medicines, household products and commodities such as edible oil jumped up due to the ascending U.S. dollar exchange rate.
The other reason of the unstable exchange rate include an increasing inflation rate, budget deficit and less reserved money which make high U.S. dollar demand in the country. Meanwhile, the global trend of strong U.S. dollar is also affecting the local market.
U Mya Than said making the market stable is more important than controlling the rate and more attempts should be applied to crack down on the black market.
He stressed the importance for the CBM to cooperate with the ministries of commerce, planning and finance to take the initiative to solve the problem.
The flexibility of currency exchange rate is vital to luring foreign direct investments, said an official of the World Bank Myanmar.
