All-time high USD exchange rate affects import market in Myanmar

Source: Xinhua| 2018-09-21 18:48:00|Editor: Shi Yinglun
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by Khin Zar Thwe

YANGON, Sept. 21 (Xinhua) -- U.S. dollar exchange rate against Myanmar kyat has reached its historical high level, affecting import market and prompting commodity price hike in Myanmar.

The U.S. dollar exchange rate continued to rise sharply to 1,630 kyats per dollar in the country's domestic market on Friday as a follow up of the jump to more than 1,500 kyats per dollar since early August as set by the Central Bank of Myanmar.

Due to the rapid rise of U.S. dollar exchange rate, prices of imported commodities and raw materials which are vital in the manufacturing sector reached its peak.

Exporters could not earn much profit as they have to buy raw materials for production.

"We need to boost export sector as Myanmar sees a significant unbalance between export and import market. High commodity price will have a big impact on working class people," Soe Tun, chairman of Myanmar Motor Vehicle Producers and Distributors Association, told Xinhua.

Local people especially those with low-income are battling with the high prices of food and imported pharmaecuticals due to the drastic increase of the exchange rate in the country.

However, pharmaceuticals produced by the state-owned industries remained stable in price as the Myanma Pharmaceutical Industries has enough foreign pharmaceutical ingredients to continue production without raising the price of their finished products.

But there will be some repercussions due to rising U.S. dollar exchange rate as 90 percent of the country's medicine relies on import, said Saw Nay New, a member of the Myanma Pharmaceuticals and Medical Equipment Entrepreneurs Association.

Meanwhile, domestic fuel price rose up as U.S. dollar appreciated, registering the price of Octane gasoline (92 RON) at 1,025 kyats (64 U.S. cents) per liter and Octane (95 RON) at 1,075 kyats (67.2 U.S. cents) as of Friday.

Price of diesel hit 1,055 kyats (66 U.S. cents) per liter while one liter of high-quality premium diesel was sold for 1,065 kyats (67 U.S. dollars).

The business circle has called on the government to reduce reliance on U.S. dollar by strictly forbidding pricing, trading and payments by dollar in the country and conduct trading with currencies of neighboring countries as an alternative.

Over a recent period, the Central Bank of Myanmar (CBM) announced removing trading band of +/- 0.8 percent on exchange of Myanmar kyat against U.S. dollar to control market fluctuation in the wake of continuous kyat depreciation.

The CBM is monitoring the foreign currency market to prevent price manipulation, a key reason for exchange rate destabilization.

The Myanmar government has formed national economic coordination committee, chaired by State Counselor Aung San Suu Kyi, to control exchange rate destabilization.

In accordance with the figures from the Commerce Ministry, the country's foreign trade totaled over 16.7 billion U.S. dollars as of Sept. 14 during the six-month transitional period which started in April.

The country has changed its fiscal year period from original April-March to October-September beginning 2018-2019, producing a six-month transitional gap.

Recently, Myanmar's domestic gold price has reached an all-time high this month, registering 1.035 million kyats (647 U.S. dollars) per tical.

There are more sellers than buyers in the gold market at present.

The country's domestic gold price has been fluctuating after reaching a record high with 950,000 kyats (633 U.S. dollars) in January.

Meanwhile, the global gold price has registered at 1,205 U.S. dollars per ounce on Friday.