Kyat depreciation against US dollar slows significantly

Myanmar managed to hold back Kyat depreciation against greenbacks and the Kyat-US Dollar over-the-counter rate has dipped in the local forex market. In August, a dollar value hit an all-time high of over K4,500 in the grey market. The prevailing exchange rate is K2,820 for buying and K2,850 for selling in the grey market.

However, the Central Bank of Myanmar (CBM) set the reference exchange rate for the US Dollar at K2,100. In order to strengthen the domestic currency in the local forex market, the CBM set the currency trading band at 0.3 per cent for the Kyat to fluctuate between these two specified upper and lower exchange rates for transactions, selling or buying, according to a directive issued by the CBM on 10 August 2022.

Therefore, financial institutions including banks and informal money exchanges are instructed to set a dollar value at K2,100 for buying and K2,106 for selling. However, those rates are not effective in trading for now. Consequently, the CBM sold dollars at its auction market for the sectors in need, to control the soaring dollar.

A total of $443.8 million were sold at an auction rate in 2021 as well. Last September 2021, a dollar value hit a peak of over K3,000 in the black market, pushing pure gold up to K2.22 million per tical. Under the guidance of the Central Committee on Ensuring Smooth Flow of Trade and Goods, the Monitoring and Steering Committee on Gold and Currency Market was formed on 17 December 2021 as gold and currency market stability play a crucial role in the trade facilitation.

The objectives of the committee are inspecting and prosecuting market manipulation, checking if there is compliance with payment rules in the domestic market, and proceeding against those unscrupulous traders who intend to interfere with the free and fair operation of the market under the existing laws, by-laws and regulations in line with the official directives, illegal foreign currency holding, illegal trade and taking legal actions against price manipulators.

Source: The Global New Light of Myanmar

Fuel oil prices sank following MOPS prices

The price of Octane 92 slipped to K1,830 per litre tracking the plunge in the price index set by Mean of Platts Singapore (MOPS), according to the fuel oil market. The prices of fuel oil have gradually decreased since the end of November. On 1 December, the prices stood at K1,965 per litre for Octane 92, K2,040 for Octane 95, K2,380 for diesel and K2,455 for premium diesel. On 9 December, the prices extended their decline to K1,830 per litre for Octane 92, K1,925 for Octane 95, K2,125 for diesel and K2,200 for premium diesel. The figures indicated a drop of K110-255 per litre within ten days.

The domestic fuel prices are following the decline in the price index set by Mean of Platts Singapore (MOPS), the pricing basis for many refined products in Southeast Asia, according to the Supervisory Committee on Oil Import, Storage and Distribution of Fuel Oil. Following the MOPS price index, the prices peaked at K2,605 per litre for Octane 92, K2,670 for Octane 95, K3,245 for diesel and K3,330 for premium diesel in late August. The committee is steering the oil sector effectively not to have a shortage of oil in the domestic market and ensure price stability for energy consumers. The committee is issuing the daily reference rate for oil to offer a reasonable price to energy consumers.

The reference rate is set on the MOPS’ price assessment, shipping cost, profit margin, premium insurance and other general costs. The rates for regions and states other than Yangon are evaluated after adding the transportation cost and the retail reference rates daily cover on the state-run newspapers and are posted on the media and official website and Facebook page of the department on a daily basis starting from 4 May. The committee is inspecting the fuel stations whether they are overcharging or not. The authorities are taking action against those retailers of fuel stations under the Petroleum and Petroleum Products Law 2017 if they are found overcharging rather than the set reference rate.

As per the statement, 90 per cent of fuel oil in Myanmar is imported, while the remaining 10 per cent is produced locally. The domestic fuel price is highly correlated with international prices. The State is steering the market to mitigate the loss between the importers, sellers and energy consumers. Consequently, the government is trying to distribute the oil at a reasonable price compared to those of regional countries. Some countries levied higher tax rates and hiked oil prices than Myanmar. However, Malaysia’s oil sector receives government subsidies and the prices are about 60 per cent cheaper than that of Myanmar. Every country lays down different patterns of policy to fix the oil prices. Myanmar also levies only a lower tax rate on fuel oil and strives for energy consumers to buy the oil at a cheaper rate.

Source: The Global New Light of Myanmar  

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Myanmar ships 5,260 tonnes of rice directly from Pathein Port to Bangladesh in 2nd batch

According to the Government-to-Government pact between Myanmar and Bangladesh, Bangladesh has been purchasing Myanmar’s white rice. The country has shipped rice directly from Pathein Industrial City since 2 November 2022. Between 1 and 8 December, 5,260 tonnes of rice were loaded onto the two ships in the second batch and the MCL-12 ship carrying 2,650 tonnes of rice departed in the morning of 8 December 2022 from the Ayeyawady International Industrial Port AIIP in Pathein Industrial City, Ayeyawady Region to Bangladesh.

Earlier, Myanmar conveyed rice to Bangladesh through Yangon Port and Thilawa terminals. In the first batch from 2 to 22 November 2022, 10,565 tonnes of Aemahta rice (five-per-cent broken) were shipped by four ships directly from Pathein city to Bangladesh. The country delivered 2,610 tonnes of rice by MCL-19 ship on 1 December and 2,650 tonnes of rice by the MCL-12 ship on 8 December in the second batch, totalling 5,260 tonnes. On 7 December, the MCL-18 ship arrived at the   Ayeyawady International Industrial Port and further exports are to be undertaken.

Myanmar’s white rice direct delivery from Ayeyawady Region to Bangladesh accumulated 15,825 tonnes, with 10,565 tonnes in the first batch and 5,260 in the second batch. “The main export item from Pathein Port is rice. If Bangladesh buys corn in addition to rice, there is an adequate supply of corn in the region. Myanmar has indicated readiness to export corn depending on the market demand. The rice shipment for the second batch has finished. We plan to export agricultural products from Ayeyawady Region to foreign trading partners. For the initial stage, efforts are being made to complete the rice shipment first,” said U Tun Tun, deputy director of the Ayeyawady Region Consumers Affairs Department.

Earlier, the second batch of rice shipment was slated for the second week of December. However, Myanmar managed to ship the rice in the first week to Bangladesh as rice outputs from Ayeyawady Region increased.  All the stakeholders involved in a supply chain including the Ayeyawady Region Government, departments concerned and private businessmen are being exerted to meet the rice demand of Bangladesh to ship them directly from the region. The direct rice shipment from Ayeyawady Region, Myanmar’s rice bowl, to the foreign markets brings about economic opportunities for rice millers, farmers and traders and employment opportunities for local communities.

Source: The Global New Light of Myanmar