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Production and new orders continue to fall in Myanmar’s manufacturing sector, with kyat-denominated exchange rate speculation against the dollar, scarcity of raw materials and rising in shipping costs

Production and new orders continue to fall in Myanmar’s manufacturing sector, with kyat-denominated exchange rate speculation against the dollar and prices continue to rise due to scarcity of raw materials and rising shipping costs, according to the Nikkei Myanmar Manufacturing PMI for June 2021 (Manufacturing Purchasing Manager’s Index). Many factories and customers’ businesses were closed, leading to a decline in jobs and purchases. During this period, the kyat was devalued against the dollar. Respondents often pointed out that prices continued to rise due to scarcity of raw materials and rising shipping costs.

The single IHS Markit Myanmar Manufacturing PMI, the only key indicator of productivity, rose from 39.7 in May to 41.5 in June, indicating a tenth consecutive month of decline in manufacturing conditions. Productivity by local producers in Myanmar fell further in June, but at a weaker rate. At the end of the second quarter, domestic demand remained weak and new orders fell sharply. The decline has been linked to a shortage of cash and a rise in prices. Overall, the current decline is one of the highest in the survey’s five-and-a-half-year history.

The workforce continued to decline sharply, with respondents pointing to workers returning to their hometowns. Despite the weakening of demand, raw material shortages and factory closures led to a sharp rise in backlog in June. In terms of prices, inflation in production costs rose, but weakened from a record high in May. Respondents said the exchange rate was deteriorating; They continue to point to shortages of raw materials and rising transportation costs. Companies reported shifting part of the initial cost burden, and the inflation rate for selling prices was the second highest in the survey so far. The survey is based on original data collected from industry by IHS Markit and supported by the Japan-based Nikkei Media Group.

Source: Daily Eleven

moneys

USD vs Kyat up by over K380 in first six months

The US dollar exchange rate against Myanmar Kyat has risen by over K380 per dollar in the first six months of 2021, the local foreign exchange market’s data showed. Although the dollar exchange rate stood only around at K1,330 per dollar in the local foreign exchange market in January, the rate skipped to K1,620 per dollar on 30 June with a rise of over K380 per dollar in six months. This is the reason why the Central Bank of Myanmar (CBM) has been purchasing and selling the US dollar in the auction market to reduce the fluctuation of foreign exchange rates in a short-term period and fulfil the needs of foreign exchange reserves.

The CBM purchased US$1.8 million in January this year and it then sold $6.8 million in February. Likewise, the bank also sold $12 million in April, $24 million in May and $12 million in June. At present, the dollar exchange rate hit K1,620 per dollar in the local exchange market. But the rate does not touch the rate that hit a high of K1,730 per dollar in May. In the first six months of 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, K1,585- 1,730 in May and K1,595-1,620 in June.

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. In 2019, 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