Moderate depreciation of the US dollar against Asian currencies over the past three months has resulted in marked improvements for the kyat, which has appreciated as much as 2.42 percent against the greenback since mid-February.
According to official exchange rates in Yangon, the value of the kyat against the dollar has grown from K988 on Feb 13 to K964 on March 20.
The dollar started rising in international markets in November, reaching a high in January before receding. The kyat’s resilience against the dollar, local experts said, is a testament of prudent monetary policy imposed by the Central Bank of Myanmar in recent years.
“The floating system seems to be working,” said U Hnin Oo, vice chair of the Myanmar Fisheries Federation, referring to the Bank’s implementation of a floating exchange rate in April 2012.
In addition to a floating exchange, the Bank established a foreign exchange market, abolished the multiple exchange rate system and narrowed the gap between the official exchange rate and the black market rate, with the difference between the two sitting at about K6, a Central Bank spokesperson said.
Prior to monetary policy reforms, exchange fluctuations against foreign currencies were volatile, with the dollar appreciating to as much as K1300 in late 2010, and falling to K700 just six months later.
“The rate has changed at a smooth pace of 0.1 to 0.3pc per day since February 26,” said the Bank official. “That is compared to international rates of about 0.45pc, which occurs even as dollars have flooded into domestic markets as a result of the peak trading season.”
He said that the foreign exchange markets meanwhile have seen increased trading, with trading volume between banks and traders up from $3 million to $4 million per day, while inter-bank market dealing has cooled.
Source: Myanmar Times