Myanmar Spring Chronicle – August 21 Scenes
MoeMaKa, August 22, 2023
Sudden rise in Myanmar kyat value & hardships of daily wage workers in cities
The value of Myanmar kyat, which had been falling steadily after the military council’s announcement to issue 20,000 kyat banknotes and the United States’ sanctions on the 2 junta-owned banks of foreign exchange operations, has risen to a certain amount today. The reason for the rebound is that after the military council re-introduced the order issued in 2014 that the foreign currency received through legal means, such as dollars, euros, yen, ringgit, Singapore dollars, yuan, and baht up to the value of 10,000 dollars, must be deposited into the bank account or sold at official exchange counters within the next 6 months.
The order does not specify how to manage funds of more than 10,000 dollars. In short, if one is found with foreign currencies including dollars in hand, they will be checked to see if they obtained them legally and if the period is less than 6 months or not.
The amount that has risen now has not yet reached the value of the kyat before the price went down. A few days ago, to pay 100,000 Myanmar Kyat locally, the Thai side only had to pay about 940 baht, but on August 21, 100,000 Kyat increased to about 1,020 baht.
The reason for the depreciation of the currency is the administration of the military council, the mismanagement of the monetary policy of the military council, political illegalities, and US sanctions may be secondary factors. For those who do not invest Myanmar kyats domestically, buying gold and dollars increases their prices and pushes the value of the kyat down more.
Due to the sudden increase in the possibility of investigation and seizure of foreign currency transactions in the market after the military council re-issued the announcement in the newspapers on September 30, 2014, which was an order to arrest and imprison those who do not obtain foreign currency through legal means and who possessed it beyond the time limit, the price of foreign currency fell and the value of the kyat rose again.
The devaluation of the kyat that occurred this week also happened in August of last year. At that time, foreign currency transfers to local banks were checked and restricted in each transaction, coinciding with the invalidity of goods export licenses and organizations’ domestic registration, which caused the dollar and other foreign exchange rates to rise significantly.
The purpose of the military council last year was to prevent the funding of revolutionary armed groups and underground movements from abroad, and it had a significant impact on the value of the Kyat currency in the economic field. From only 2,000 kyats to 1 US dollar, it reached 3,000 kyats, and after September and October last year, it remained above 2,800 kyats to 1 dollar until the current comeback.
The devaluation of the kyat is not only a problem in the economic field but also a political one. The increase in the price of fuel, agricultural fertilizers, palm oil, rice, freight and travel costs has continuously affected.
Fuel oil prices have risen to around 2,400-2,500 kyats per liter in Yangon, and palm oil prices have risen to over 10,000 kyats per viss in recent days. Although the prices of commodities have suddenly risen significantly, the daily wages of those working in factories have not risen, so it is a situation where workers who live and work in cities are greatly affected. The Ministry of Labor of the Military Council has ignored any promotion in wages, and the minimum wage has not been changed from 4,800 kyats per day.
There are hundreds of thousands of day laborers in cities such as Yangon, Mandalay, Bago, and Pathein, and they work in garment factories and shoe factories, which are called wage labor.
The military council may think that the low wage of hundreds of thousands of workers is just an economic problem, but there is a possibility that such low wages will turn into a political problem in a certain situation and fuel the political problem.