After the Central Bank of Myanmar has tightened the dollar exchange rate to between 0.5% of its reference rate by an order issued on November 9, the dollar rate against Myanmar Kyat has dropped to MMK 1,778 per dollar today.
Following the order, there were more buyers than sellers in the market causing many changers unable to sell dollars.
“It is not because we don’t sell dollars despite having dollars in our hands. But because there are only demands with no sellers,” U Wanna Tun, Managing Director of the Sunflower Company Limited, told Myanmar Business Today. “Since there were no sellers, people, who are actually needing dollars, can buy it.”
The Central Bank of Myanmar in early September scraped the reference rate, which allowed dealers to trade dollars 0.08 % above or below the reference rate, and allowed floating exchange rates in an attempt to stabilize skyrocketing dollar rates against. Despite the move, the dollar rate remained strong until later October.
Now, the Central Bank to further strengthen the Myanmar Kyat against the dollar has reduced the margin of the reference rate to 0.5 % from 0.8 %.
“The rates cannot be controlled. There will be dollar trading informally. But, by doing so, the rates can be kept in formity in the formal market. But it connot be controlled because sellers will only sell when they like the prices,” Dr. Soe Tun, Owner of Wakema Money Exchange told Myanmar Business Today.
The Central Banks of Myanmar has been pumping hundreds of millions of dollar to in an efforts to strengthened the plummeted Myanmar Kyat value.