A strengthening US dollar on global currency markets, coupled with Myanmar’s growing trade imbalance, has pushed the local currency’s exchange rate above 1,000 kyats per US dollar. Than Lwin, the vice chairman of Kanbawza (KBZ) Bank, said the US currency has made a stronger showing as its economy has bounced back from the global financial crisis of 2008. Than Lwin also said that Myanmar’s trade deficit was a key factor in influencing the kyat’s weakened position.
As the country’s economy has undergone major changes following the installation of a nominally civilian government in 2011, total trade volume has increased, but a widening trade imbalance has emerged. In the first half of the current fiscal year from April to the end of September, Myanmar ran a trade deficit of about US$3 billion, importing some $9 billion in goods and exporting only $6 billion, which cited the Ministry of Commerce.
Myanmar’s main imports are electronics, agriculture-based equipment, automobiles, refined oil products, processed foods and machinery. The country’s biggest exports are rice, timber, jade and gems, oil and gas, and beans and pulses. Maw Than, a senior economist and retired professor from the Yangon Economic Institute, said the trade gap between imports and exports was a major factor in the US dollar demand’s growth in the local market.
The kyat’s fall against the dollar will negatively impact consumers of imported goods, who will see their local currency purchasing power shrink. But purveyors of Myanmar’s major exports, including rice and garments, will benefit from the weak kyat on global markets.