Myanmar exporters concerned over falling dollar rate

Traders are concerned about international demand and export revenues in Myanmar, which have taken a hit as a result of lower demand and a weaker dollar exchange rate.

The Central Bank of Myanmar’s (CBM) reference exchange rate was set at K1287.4 per dollar on November 3, its lowest level in two years.

“The dollar price is weakening against the Myanmar kyat. It is good value for importers but exporters are facing more difficulties. We are currently in the paddy harvesting season so our incomes may decline a lot at the current exchange rate. The CBM should take note of the situation,” said U Soe Tun, a local trader.

The fall in demand for exports comes at a time when the country is facing disruptions in major border trade routes as a result of COVID-19, said U Hnin Oo, vice chair of Myanmar Fisheries Federation.

According to the Ministry of Commerce, trade volumes in the first three weeks of the current fiscal year is less than half of the income earned during the same period in fiscal 2019-20.
“The export market was already ailing due to COVID-19 but this has been compounded by the weak dollar rate. If the dollar rate continues falling, the exporters can face losses,” U Hnin Oo added.

“The government and CBM needs to coordinate to find possible solutions for this potential problem,” said U Soe Tun. He warned that although export volumes have not yet been “seriously” affected, revenues could take a hit should the dollar remain at current levels.

Meanwhile, due to a drop in domestic spending, demand for the dollar to purchase imported goods has also been affected, and that has also contributed to the weak exchange rate.

U Soe Win Maung, a financial analyst, reckons the dollar rate could remain below K1300 per dollar for some time to come. He pointed out that the US Federal Reserve has printed and distributed some US$3 trillion to stimulate its economy in the past seven months.

“If the US continues printing, the dollar rate will weaken further,” he said.

Source : Myanmar Times

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