Myanmar currency drops 60% in weeks as economy collapses since February coup

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September 29 (Reuters)Burma currency has lost more than 60% of its value since the beginning of September, conduct raise food and fuel prices in an economy that has collapsed since a military coup eight months ago.

Many gold shops and exchange offices closed on Wednesday due to the turmoil, while the kyat’s dive spread across social media with comments ranging from stern warnings to efforts to find some money. humor as another crisis hits the conflict-torn nation.

“This will shake the generals because they are quite obsessed with the kyat rate as a larger barometer of the economy, and therefore a reflection on them,” said Richard Horsey, a Myanmar expert at the International Crisis Group. .

In August, the Myanmar Central Bank attempted to keep the kyat at 0.8% on either side of its benchmark rate against the dollar, but dropped out on September 10 as pressure on the exchange rate intensified.

The dollar shortage has become so severe that some money changers have lowered their shutters.

“Due to the volatility of currency prices right now… all branches of the Northern Breeze foreign exchange service are temporarily closed,” the bureau de change said on Facebook.

Those still operating cited a rate of 2,700 kyat to the dollar on Tuesday, up from 1,695 on September 1 and 1,395 on February 1 when the military toppled a democratically elected government led by Nobel laureate Aung San Suu Kyi.

WORLD BANK WARNS ECONOMY OF 18% GROWTH

The World Bank predicted Monday the economy would collapse by 18% this year and said Myanmar would experience the largest employment contraction in the region and the number of poor people would rise.

Growing economic pressures come amid signs of an upsurge in bloodshed, as armed militias have become more daring in clashes with the military after months of protests and strikes by junta opponents.

“The worse the political situation, the worse the exchange rate will be,” said a senior official at a Burmese bank, who declined to be identified.

Myanmar is also struggling to cope with a second wave of coronavirus iinfections it started in June with authorities’ response crippled after scores of health workers joined the protests. Reported cases have peaked although the true extent of the outbreak remains uncertain.

In the months following the February 1 coup, many people queues to withdraw savings from banks and some bought gold, but a jewelry dealer in Yangon said that many desperate people are now trying to sell their gold.

The central bank gave no reason why it abandoned its managed float strategy earlier this month, but analysts believe its foreign exchange reserves must be seriously depleted.

Central bank officials did not respond to calls for comment, but World Bank data shows it only had $ 7.67 billion in reserves at the end of 2020.

After pulling out of its managed float, the central bank spent another $ 65 million, buying kyats at a rate of 1,750 to 1,755 to the dollar between September 13 and September 27.

The bank manager said the central bank’s efforts had had limited impact on a declining currency market.

The economic crisis has pushed up the price of basic foodstuffs, and the UN The Office for the Coordination of Humanitarian Affairs said this week that around three million people are now in need of humanitarian assistance in Myanmar, up from one million before the coup.

Ia country where the gross domestic product per capita was only $ 1,400 last year, a 48-kg bag of rice cost now 48,000 kyats, or about $ 18, up to nearly 40% since the coup, while gasoline prices have almost doubled to 1,445 kyat per liter.

“If you have money, you buy gold, you buy dollars, you buy baht (Thai). If you have no money, you will starve,” the user said. of Facebook Win Myint in an article.

(Reporting by Reuters staff; writing by Ed Davies; editing by Simon Cameron-Moore and Nick Macfie)

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