Myanmar’s currency has plunged more than 7% over the past month to the lowest since it was floated last year, raising concern about economic stability in Asia’s newest democracy

Saturday May 25, 2013

Kyat slumps as imports flood into Myanmar

YANGON: Myanmar’s currency has plunged more than 7% over the past month to the lowest since it was floated last year, raising concern about economic stability in Asia’s newest democracy.

The drop coincides with a construction boom in Myanmar’s commercial capital, Yangon, which is fuelling demand for dollars as builders import equipment and materials, part of a scramble by investors to tap one of the world’s last frontier markets after an easing of sanctions by Western countries.

Money changers such as Kyaw Naing say people are hoarding dollars, expecting further rises, in the first major bout of currency speculation since Myanmar emerged from military rule in March 2011 and introduced political and economic reforms.“We are getting fewer customers now because people don’t want to sell their dollars, because they know the value will rise even higher,” Kyaw Naing said, holding a fistful of the kyat currency in his hole-in-the-wall stall in Yangon.

The sliding kyat is welcome relief for rice farmers and other exporters but has prompted concern over the stability of Myanmar’s tiny, long-isolated economy, posing one of the biggest challenges yet for policy makers who introduced a managed float of the currency in April 2012.

“It’s quite clear that the plunging kyat has already had a strong impact on the import industry and it will affect consumers,” said a senior official from the Ministry of Commerce, noting Myanmar’s average April-May import bill of US$30mil a day was about 17% higher than last year.

A disastrous “Burmese Way to Socialism” introduced after a 1962 coup followed by sweeping nationalisation and decades of military mismanagement have left Myanmar heavily dependent on imports for basic needs, from edible oils to condensed milk and medicine, official data shows.

“The plunging kyat has had a strong negative impact on importers of all goods medicines, electronic appliances, computers, edible oil, diesel, you name it,” said Soe Tun, a director of several businesses including Farmer, the country’s biggest car showroom.

Western academics and economists advising the government, however, say the currency has been overvalued and needs to fall to help farmers, the vast majority of whom have yet to benefit from the country’s reforms. – Reuters

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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