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Greenback-Kyat exchange rate drops over K20 per dollar in over 2 weeks

The exchange rate of the US dollar has been on the decline against Myanmar Kyat in the domestic currency market, a dropping by over K20 in over two weeks, according to the Central Bank of Myanmar. The rate went down from K1,447 per dollar on 22 February to K1,423 per dollar on 10 March in the domestic exchange market.

Similarly, the domestic gold price is also dropping in the market. The price per tical (0.578 ounces, or 0.016 kilograms) of gold was around K1,410.000 on 3 February but had dropped to K1,325,000 by 10 March. In the domestic market in 2021, the highest and lowest exchange rate is currently fixed around K1,327-1,345 in January and K1,330-1,447 in February.

This year, the exchange rate moved in the range of K1,465-1,493 in January, K1,436-1,465 in February, K1,320-1,445 in March, K1,395-1,440 in April, K1,406-1,426 in May, K1,385-1,412 in June, K1,367-1,410 in July, K1,335-1,390 in August, K1,310-1,355 in September, K1,282-1,315 in October, K1,303-1,330 in November and K1,324-1,403 in December. In the last six months in 2019, the rates were fixed at K1,508-1,517 in July, K1,510-1,526 in August, K1,527-1,565 in September, K1,528-1,537 in October, K1,510-1,524 in November and K1,485-1,513 in December. On 20 September 2018, the dollar exchange rate hit a record high of K1,650 in the local exchange market. 

Source: The Global New Light of Myanmar

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External trade drastically drops by $3.37 bln as of 26 Feb

Myanmar’s external trade between 1 October and 26 February in the current financial year 2020-2021 shrank to US$12.75 billion, a sharp drop of $3.37 billion compared with the corresponding period of the FY2019-2020, according to the Ministry of Commerce. During the same period in the previous FY, the trade stood at $16.12 billion, according to data released by the ministry. During the past five months, Myanmar’s export was worth over $6.45 billion, which plunged from $7.6 billion registered a year-ago period. Meanwhile, the country’s import was valued at $6.29 billion, showing a decrease of $2.223 billion compared with the last FY.

Both sea trade and border trade dropped amid the coronavirus impacts. The neighbouring countries tightened border security and limit the trading time to contain the spread of the virus. Pandemic-induced container shortage pushed up the freight rates to almost triple in Myanmar, causing delays for traders. Additionally, some ocean liners suspended cargo transport from Myanmar, according to the Myanmar Mercantile Marine Development Association. Furthermore, the current political conditions drag down the trade. At present, the traders have a transaction problem triggered by the shutdown of the private banks, a market observer shared his opinion.

Myanmar exports agricultural products, animal products, minerals, forest products, and finished industrial goods, while it imports capital goods, raw industrial materials, and consumer goods. The country’s export sector relies more on the agricultural and manufacturing sectors. The government is trying to reduce the trade deficit by screening luxury import items and boosting exports. Under the National Planning Law for the Financial Year 2020-2021, Myanmar intends to reach an export target of US$16 billion and import at $18 billion. The Ministry of Commerce is focusing on reducing the trade deficit, export promotion and market diversification. Since 2011, the Ministry of Commerce has adhered to its reform policy. A series of moves to liberalize and open the economy have been introduced through policy development to improve the trade environment.

Source: The Global New Light of Myanmar

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“Hundi” businesses exploit benefits for border trade as private banks shutter

The closure of private banks forced the traders to turn to the operators running ‘hundi’, an informal money transfer system, to make transactions in the border trade, said U Min Khaing, chair of Myanmar Corn Industrial Association. At present, the Myawady border does not have trade barriers except transaction problem triggered by the shutdown of the private banks, he continued. Trade is regularly flowing in and out of the country. What a problem is that businesses cannot claim income through a legitimate financial market during the meantime.

Now, the trade is carried out through hundi operators. The closure of formal financial markets except the state-owned banks render the cash flow difficulties. Hundi business is weak to protect transactions and less secure. Besides, they charge too much for services, U Min Khaing stressed. The remittance cannot be done through the private banks and so, the traders use hundi service. It is okay for big cities like Yangon and Mandalay. They are not enough for security whatever. Bank services are much better than hundi. For an instance, they can withdraw K500 million immediately at the private bank.

However, withdrawal through hundi operators takes time for such a big amount of money. Myanmar is currently shipping about 5,000-6,000 tonnes of corns to Thailand through the Myawady border every day. Myanmar is allowed for corn export between 1 February and 31 August with Form-D, under zero tariff. Myanmar corn exports were exempted from tax between February and August. Thailand imposed a 73 per cent of tax on corn import to protect the rights of their growers if the corns are imported during the corn season of Thailand, under the notification of the World Trade Organization regarding corn import of Thailand.

Source: The Global New Light of Myanmar