Myanmar Kyat falls to new low amid inflation fears, dollar shortage
October 29, 2014 15:30 3,376 Viewed
Yangon (dpa) - The Myanmar kyat fell to its lowest rate to the dollar in years Wednesday, amid growing demand for the US currency for imports, and fuelling concerns of inflation, news reports said.
The currency reached 1,012 to the dollar Wednesday, down 24 per cent since the official exchange rate was allowed some flexibility in April 2012 by the government of Thein Sein, which has opened up the countr after decades of military dictatorship.
"The Central Bank doesn't sell enough dollars for us," said an official from the Ayarwaddy Bank, one of the leading private banks offering money exchange, asking not to be named.
The Central Bank is meant to sell 10 million dollars per day, but is only releasing a quarter of that, he said.
The demand for dollars was being driven by the country's rapid consumption, especially of manufactured goods, as it recovers from decades of seclusion by the military regime and isolation by sanctions, the Irrawaddy magazine reported Tuesday.
The trade deficit was around 3 billion dollars for the first half of the current fiscal year to the end of September, on exports of 6 billion dollars and imports of 9 billion, it said, citing the Commerce Ministry.
The World Bank estimates inflation in Myanmar at 7 per cent, and has called for it not to be allowed to exceed 10 per cent, it reported.
The drop in value of the kyat was also due to the dollar's rise against all currencies after the US Federal Reserve hinted at a rise in interest rates, the Eleven Myanmar news outlet reported Tuesday.