Myanmar Spring Chronicle – August 13 Overview
(MoeMaKa, August 14, 2024)
Has Confidence in the Kyat Collapsed? Reports of a Coup in Naypyidaw Emerge
Following the military coup, political instability, mismanagement of the economy, and the costs of ongoing warfare have led to a loss of international investment. All these factors have contributed to the devaluation of the Myanmar Kyat, causing it to plummet in value annually, sometimes monthly, with percentage drops reaching double digits or even higher.
At the time of the coup, the exchange rate of the Myanmar Kyat to the US Dollar was around 1,500 Kyat. However, it quickly escalated to over 1,900, then 2,000 Kyat, and in subsequent years, the exchange rate spiked dramatically, sometimes doubling or even tripling within a year. The recent weeks have seen a sharp depreciation in the Kyat’s value, with rates dropping from approximately 4,000 Kyat per dollar to over 5,000 Kyat within days, and recently surpassing 6,000 Kyat. By August 13, the exchange rate hit an unprecedented high of over 7,000 Kyat per dollar. The rapid depreciation has reached such a critical point that money changers have had to pause operations, and trade in imported goods has almost come to a halt due to market uncertainty.
Even before this recent crisis, the exchange rate was volatile, with the Kyat falling from 4,000 Kyat per dollar to over 5,000 Kyat in just a few days, and then further rising to over 6,000 Kyat. On August 13, the exchange rate shockingly hit over 7,000 Kyat per dollar, a rate never seen before. The value of the Kyat fell so rapidly that money changers had to suspend operations, and transactions in goods and services were put on hold as the currency’s value continued to plunge.
Despite the steep decline in the Kyat’s value, the daily wages for blue-collar workers, such as laborers and factory workers, remain unchanged. For example, a typical daily wage for an eight-hour workday is still around 5,800 Kyat, with an additional 2,000 Kyat for overtime, which is now worth less than one US dollar due to the devaluation.
This depreciation has also caused prices to skyrocket for essential goods like cooking oil, fuel, and medicines, which are imported and paid for in foreign currencies. As the value of the Kyat declines, these goods have seen immediate price increases. In major cities like Yangon and Mandalay, long lines of vehicles are forming at gas stations, with some people even camping overnight to secure fuel.
The current situation raises concerns about the possible collapse of the military-controlled financial system. Some are wondering whether this financial collapse might precede the end of political and military control.
In some border areas and towns controlled by ethnic groups, foreign currencies are already being used, while in many other regions, the military still maintains control. Approximately 70 to 80 towns are under the control of ethnic armed groups, where the Kyat is still in use, leading to severe economic repercussions due to the currency’s devaluation.
Over 80% of the population is directly affected by the Kyat’s devaluation, with no escape from its impact. Even those with little money face soaring prices for basic goods, making survival increasingly difficult.
This situation is reminiscent of the economic collapse seen during the Second World War when successive governments changed, rendering currencies worthless. Although the current situation is different from the colonial period or the post-Fascist Japanese occupation, the economic strain is comparable.
As Myanmar strives for political and military independence, there is an increasing need to establish a new, stable currency system that is recognized and trusted by the people.
On the night of August 13, a rumor spread on social media that military leaders in Naypyidaw had staged a coup against the ruling junta. The rumor originated from a post by a CDM officer on his social media page, which prompted news outlets to seek confirmation. However, the rumor was not verified, and many now believe it was either a plot or disinformation as part of a psychological warfare campaign.
The growing dissatisfaction with Min Aung Hlaing’s military and political leadership, even among his supporters, might have sparked such a plot or rumor, leading to speculation about an internal coup.