The dollar’s appreciation was having an almost completely negative effect on the country, as the export sector was too weak to take advantage of the opportunities it provided, said Dr Ko Ko Gyi, chairman of Diamond Star Co Ltd.
He was attending an economic discussion called “Practical business ideas and performance” at the Ministry of Commerce’s Yangon office.
Ko Ko Gyi, who is also on the National Economic and Social Advisory Council, said: “Our advisory team has already given our suggestions to the government. Exchange rates are like a double-sided knife. Japan, South Korea and China increase their export volumes when their currencies are depreciating against the dollar. These countries have capital stocks as well as the production capacity.
“They can do more when their currencies are weak. Here in Myanmar, the weakening currency could encourage the export volume on paper. But we have no goods to export. So we have to bear the brunt of the low-exchange rate, as the country has no exports. We don’t enjoy the fruit of it like other countries. According to our estimations, the ratio of advantages to disadvantages is 10:90 per cent. The value of imported goods has gone up, resulting in high inflation,” he said.
The country has a huge trade deficit, exceeding US$5 billion last year and Ks1 billion after the first three months of this fiscal year.
Ko Ko Gyi said the Central Bank of Myanmar (CBM) should be more actively engaged in handling the exchange rate as it became an independent entity.
The dollar hit a record under the current government, reaching Ks1,300 on the street before dropping back to Ks1,210.
Economists say the fall and rise in the kyat’s value may be linked to price manipulation.
The dollar fell back to around Ks1,210 following talks between MPs and the CBM and ministry officials.
The value of a dollar increased by Ks33 in the first week of June and Ks30 in the second week.
On June 11, on the street the selling price per dollar was Ks1,210, while the buying price was around Ks1,200.
Talks between ministers, the CBM and domestic banks took place on May 13 resulting in the CBM issuing a directive for authorised dealers to disburse a maximum of US$5,000 at a time to foreign currency bank account holders on May 27. Trading and services companies were told to only make domestic payments in kyat on May 28. But the value of a dollar remained at around Ks1,240 until June 10.
Source: Eleven Media