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Myanmar's kyat stabilises after fal
- Subject: Myanmar's kyat stabilises after fal
- From: darnott@xxxxxxxxxxx
- Date: Mon, 21 Aug 2000 01:48:00
Myanmar's kyat stabilises after fall to record low.
YANGON, Aug 16 (Reuters) - Myanmar's beleaguered kyat currency has
stabilised and edged higher against the dollar on the black market after
diving to record lows in recent weeks amid spiralling inflation, currency
dealers said on Wednesday.
"The kyat stopped falling after hitting a floor of 395 to the dollar last
and is trading at 385/390 at the moment," one dealer said.
The kyat's fall to its weakest ever levels against the dollar was sparked
mainly by sharply rising prices of imports and luxury goods, the weakening
of the Thai baht and by panic buying of some commodities as a hedge
Before this month's slide, the previous record low was 384 to the dollar in
August 1998. The official rate is six kyat to the dollar.
A commentary in the Myanmar-language Kyemon newspaper earlier this
month warned against "unscrupulous speculation" and said the authorities
would take action to bring prices under control.
Newspapers in Myanmar are regarded as official mouthpieces of the
The Myanmar government increased the salaries of civil servants by five to
eight times in April to bring them more into line with spiralling prices, but
the move helped fuel inflation, estimated at around 30 percent a year.
Prices of common consumer goods have not risen too steeply, residents
say, due to measures taken by the authorities, including the opening of five
tax-free markets in Yangon.
But prices of gold, cars and other imported items have risen sharply.
Analysts say there was strong demand for these items as a way of guarding
against inflation and the weakening kyat.
Prices of low-market reconditioned vans and cars more than doubled in
the last three months. Myanmar authorities imposed strict regulations on
cars in late 1997, virtually stopping the flow of passenger cars into the
Car prices eased last week after the authorities took action to try to reduce
demand, locals said.
Regulations were introduced obliging car buyers to declare the source of
the money used for the purchase, and enforcing the payment of all taxes
when car licenses were renewed.
Myanmar's economy remains tightly controlled despite the introduction of
some market reforms in 1988 after 26 years of central planning. The
economy is commodity-based and relies heavily on the export of rice,
pulses and prawns.