An increase in the value of Myanmar Kyat can cause the entire economy to collapse

If you look at global ranking indicators, Myanmar is always at the bottom. However, Myanmar's currency, the kyat, has risen 20 percent in value over the past year, making it Asia's best-performing currency. With a lot of hot money from the financial market, gems, buildings, An increase in purchases of materials and state-owned assets; The rising oil and natural gas prices have created a rise in the value of the kyat, which was once low.

In places where dollars are traded from Yangon, the former capital, the exchange rate, which was once over 1,000 to 1,100 kyat per dollar, has reached less than 790 per dollar. The issue can be partly attributed to the decrease in the value of the dollar, but traders, businessmen The investors reached a situation where they could not continue to stand in the foreign markets and sold their products only in the domestic market.

As a result, the prices of agricultural products plummeted, forcing farmers to take on more debt than before.

Tourism and travel agencies are struggling to avoid debt. Even the cronies who cooperated with the military to get business areas complained that their businesses were suffering. "This has affected everyone," said an aid worker at an NGO.

The Myanmar Kyat issue has become a major challenge or test for the new Myanmar civilian government that took over power from the junta last April. So far, the government has not been able to successfully address this challenge. In recent times, the reduction of customs duty on exported goods from 10 percent to 7 percent has given exporters some breathing space.

A large group of business advocates Lobby has urged the central bank to take effective actions regarding the Kyat issue. However, it is difficult for the Central Bank of Myanmar to effectively solve the problems due to the two monetary systems, the kyat and the FEC. According to the government, the official dollar exchange rate is six kyats per dollar. All private companies and all businessmen working with dollars are dependent on the dollar black market.

Reformers point out that only by abolishing the entire evil system will the money be properly managed. Myanmar President U Thein Sein's business consultants have revealed plans to start working on currency reforms. However, Vice President Thi Hathura U Tin Aung Myint Oo, who does not want President U Thein Sein to make economic and political reforms.

It seems to be caught between two factions, a group from the administrative capital of Nay Pyi Taw and a group of pro-reformers.

However, in recent times, President U Thein Sein has increased the pensions of retired government employees and is also brainstorming for poverty reduction. However, as conservative groups push to take effective action for monetary reform, their interests are legal, Historian U Thant Myint Oo said that actions that do not conform to the rules are likely to be done.

Even some military generals are in a state of revulsion at the idea of financial consolidation. If economic difficulties lead to unrest, they will become even more reluctant to do anything about foreign exchange rates.

However, the issue of making a fixed monetary system is going to be a risky business. The situation is made even worse by Myanmar's difficult-to-understand economic situation, which includes unsound banks. Recently, the Central Bank of Myanmar has requested assistance from the International Monetary Fund (IMF) to provide technical assistance on exchange rate reform issues. However, due to Western sanctions against Burma, the IMF will face difficulties in providing assistance.

Because of this, the value of the Myanmar kyat will continue to rise, analysts and observers believe. Therefore, it is even warning that the rise of Burmese kyat can collapse the entire economy.

(Article from The Economist)