Myanmar Spring Chronicle – August 9
(MoeMaKa) August 10, 2024
Kyat Value Plummets Drastically
The Myanmar Kyat has plunged to an unprecedented low, with the exchange rate reaching a record of 6,000 Kyats per US dollar on August 9. This drastic devaluation has also driven the price of gold to around 7.1 million Kyats per tical, according to reports.
Recent news highlights that the military junta has introduced new regulations, threatening to revoke the licenses of overseas employment agencies if they do not remit money through official channels to the families of Myanmar workers abroad. This comes alongside other regulations that have emerged in recent days.
Additionally, the junta has announced a 10% reduction in the exchange rate for foreign currency earned through exports, further exacerbating the foreign currency shortage. This reflects the ongoing mismatch between demand and supply of foreign currency entering the country.
On the economic front, the situation is dire with declining production and service activities, driven by the cost of war and the instability caused by armed conflicts. As a result, the country faces an increased need for foreign currency to purchase essential goods, fuel, construction materials, and medicines.
The devaluation of the Kyat has also been influenced by speculation, unstable political conditions, and economic disruptions. The rise in gold and dollar prices is a visible symptom of the underlying causes of the Kyat’s depreciation.
In previous years, the Kyat’s value would typically drop once or twice a year, but since 2021, these incidents have become more frequent due to ongoing military spending and conflict costs. The exchange rate has rapidly declined from 2,000 Kyats per dollar to around 6,000 in just a few months.
The declining trust in the Kyat has led to a decrease in economic investments and an increase in the conversion of Kyat holdings into more stable currencies. This situation is contributing to a rising demand for foreign currency, impacting the exchange rate market.
The devaluation of the Kyat is having a tangible impact on the population, leading to soaring prices and increased living costs. The broader political and military implications of this economic crisis are still uncertain and require careful analysis.
Questions are now being raised about whether the Kyat will lose its credibility to the point of needing replacement, and whether the military regime’s weakening control could lead to the introduction of a new currency in the near future.