US dollar weakening despite CBM dollar purchase at auction

US and Myanmar banknotes on display.  Photo: Phoe Khwar
US and Myanmar banknotes on display.  Photo: Phoe Khwar

By Nyein Nyein

The US dollar has been sliding against the Kyat in the local currency market. However, the Central Bank of Myanmar (CBM) has been purchasing dollar in the auction market, according to the local forex market.  The CBM reportedly purchased about 3.8 million dollars in the auction market on 25 August through foreign exchange auction. However, the exchange rate touched a low of K1,340 which slumped from the opening price of K1,360 on 27 August. The instability in the exchange rate posed difficulties to those stakeholders engaged in the agriculture and livestock supply chains, including farmers and exporters. Having said that, Dr Soe Tun, a businessperson, pointed out the stable exchange rate is of vital importance for the businesses. “It is such a good move of the CBM. It can help govern the market not to have a steep fall. It is good if the local forex market is more stable than that. When Myanmar traders export agro and livestock products, the dollar exchange rate usually moves in the volatile range. Some countries make their local currency weak while exporting their products. Yet, it turns out opposite in our country. What matters most is the stability in the exchange rate for the exporters,” said Dr Soe Tun.
At present, the local forex market sees the weak sentiment amid the coronavirus outbreak and the trade disputes between the US and China, he continued. This year, the exchange rate moves in the range of K1,456-1,493 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 and K1,367-1,410 in July. 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. (Translated by Ei Myat Mon)

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