8-fx

Dollar exchange rate falls by K10 after CBM sells $3 mln

The US dollar exchange rate fell by K10, following the Central Bank of Myanmar (CBM) selling 3 million US dollars, according to the local foreign exchange market. The US dollar exchange rate dropped when the CBM started to sell 3 million dollars at an auction rate for the first time on 7 June. The dollar exchange rate against Myanmar Kyat stood at K1,590 per dollar on 7 June. The rate directly fell to K1,577 per dollar on 11 June.

On 12 May, the dollar exchange rate hit a high of K 1730 per dollar in the local foreign exchange market. Consequently, the CBM has been selling dollars at an auction rate since 12 May, resulting in the exchange rate falling to K 1,580 per dollar this month. CBM is selling the US dollar at an auction rate, intending to keep the exchange rate stable. In the domestic market in 2021, the highest and lowest exchange rate is currently fixed around K1,327-1,345 in January, K1,335-1,465 in February, K1,420-1,550 in March, K1,550-1,610 in April and K1,585-1,730 in May.

In 2020, 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. Last year, the rates are pegged 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 an all-time high of K1,650 in the local currency market.

Source: The Global New Light of Myanmar

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CMP garment exports drop by 20 per cent in eight months

Myanmar’s garment exports witnessed a decline of over 20 per cent in the past eight months (Oct-May) of the current financial year 2020-2021 compared with a year-ago period on the back of a slump in demand by the European Union market, stated the Ministry of Commerce. Exports of garments manufactured under the cut-makepack (CMP) system were valued at US$2.2 billion between 1 October and 28 May in the current FY, according to data from the Ministry of Commerce. The figures plunged from $2.7 billion in the corresponding period of the last FY2019-2020. The factories are facing cancellation of order and slump in output, new orders. However, The Swedish fashion retailer H&M is gradually placing orders from Myanmar again after it paused in March. Then, more international fashion retailers such as Primark and Bestseller start to resume new orders. Additionally, Germany will also continue its support for Myanmar garment businesses so that Myanmar women can continue their livings, posted the Germany Embassy Yangon’s Facebook.

The garment sector is among the prioritized sectors driving up exports. The CMP garment industry emerged as a promising one, with preferential trade from Western countries. Nevertheless, all cannot still expect normalcy for now due to the possible disruption in the logistics and supply sector and other serious consequences amid the political instabilities and the COVID-19 impacts, traders stressed. The Myanmar Garment Manufacturers Association (MGMA) reported in the May newsletter that 564 factories are actively running the business, and 177 has no operation. The factories include foreign investment, domestic investment and joint venture businesses. China constitutes the majority of the foreign investment with 302 factories. Myanmar’s manufacturing sector recorded an accelerated downturn in the previous months as political changes led to factory closures. The layoff is extended, and some workers were forced to return to their hometowns. Turning to prices, higher material costs and unfavourable exchange rate movements contributed to a sharp increase in cost burdens, the HIS Markit stated.

More than 500 members and over 700 garment factories in Myanmar are listed on the MGMA, with an employment of about 600,000 workers. Women account for 95 per cent of workers in the garment industry. However, a third of garment industry workers are out of jobs in difficult times. Myanmar’s manufacturing sector is primarily concentrated in garment and textiles produced on the Cutting, Making, and Packaging basis. It contributes to the country’s GDP to a certain extent. Myanmar mainly exports CMP garments to markets in Japan and Europe and the Republic of Korea, China, and the US. The export value of CMP garments was only $850 million in the 2015-2016 FY, but it has tripled over the past two FYs. In the 2016-2017FY, about $2 billion was earned from exports of CMP garments. The figure increased to an estimated $2.5 billion in the 2017-2018FY and $2.2 billion in the 2018 mini-budget period (from April to September). According to the Commerce Ministry, it tremendously grew to $4.6 billion in the 2018-2019FY and $4.8 billion in the 2019-2020FY.

Source: The Global New Light of Myanmar