By Aye Thidar Kyaw | Tuesday, 26 May 2015
Speculators
are hoarding dollars as the value rises, pushing market rates past the
legal exchange rate maintained by the Central Bank of Myanmar, according
to government officials.
A prospective buyer checks out gold bracelets in Yangon. Photo: AFP
While the US dollar has appreciated against most international currencies this year, the local situation is compounded by the small range of investment opportunities in Myanmar. The property market was one of the main domestic investment destinations over the past three years, but has been slow since last year.
“The property market is no longer a playground for speculators, so it is time for gold and dollars again,” said Ministry of Commerce adviser U Maung Aung. “We’ve found some people are collecting dollars like an asset.”
The ministry will take action against people who are hoarding dollars for speculative motives, he added.
The Central Bank last week warned local banks to ensure they follow the official exchange rate. It is illegal to trade the dollar and kyat outside a 0.8 percent band set daily by the Central Bank, though this year the prevailing market rates have consistently been higher than the official rate. Yesterday, the Central Bank’s rate was 1082 kyats per dollar, though the market rates were closer to K1120. Unwilling to trade at the official rate, many exchanges have either continued offering the market rates or stopped selling dollars.
Market rates have been above the official rate for most of 2015.
U Maung Aung said the Ministry of Commerce, the Central Bank, and law enforcement agencies from the Ministry of Home Affairs are watching for price spikes in specific commodities, intending to take action against those who purchase large quantities with no intention of using them productively. However, U Maung Aung did not detail how this will work in practice.
Local gold prices have also creeped upward. Internationally, spot gold sold for $1205 a troy ounce yesterday, and has held steady for most of May. Locally, prices have slowly climbed this month, trading yesterday at K710,000 a tical (equal to 0.576 ounces or 0.527 troy ounces), compared with K660,000 a tical in late April.
Central Bank officials have said they are responsible for the stability of commodity prices.
“We are watching and calculating the market price to see if changes are normal or not,” he said.
Price growth particularly in gold and dollars has been larger than international trends would suggest, though authorities have not yet directly intervened to manipulate prices, the official said.
“If the situation continues to excess, we have some plans to intervene in the market,” he said.
Many local markets are open to manipulation. Some investors take a position in a currency or commodity, then spread rumours to their favour before selling, he said.
“Prices don’t shake too much with first time sales, but they will if large positions are taken. Much of the money currently entering dollars and gold may later flow to other areas like property, so we don’t think current levels are permanent. Though if not, we will intervene,” he said.
Origin
A prospective buyer checks out gold bracelets in Yangon. Photo: AFP
While the US dollar has appreciated against most international currencies this year, the local situation is compounded by the small range of investment opportunities in Myanmar. The property market was one of the main domestic investment destinations over the past three years, but has been slow since last year.
“The property market is no longer a playground for speculators, so it is time for gold and dollars again,” said Ministry of Commerce adviser U Maung Aung. “We’ve found some people are collecting dollars like an asset.”
The ministry will take action against people who are hoarding dollars for speculative motives, he added.
The Central Bank last week warned local banks to ensure they follow the official exchange rate. It is illegal to trade the dollar and kyat outside a 0.8 percent band set daily by the Central Bank, though this year the prevailing market rates have consistently been higher than the official rate. Yesterday, the Central Bank’s rate was 1082 kyats per dollar, though the market rates were closer to K1120. Unwilling to trade at the official rate, many exchanges have either continued offering the market rates or stopped selling dollars.
Market rates have been above the official rate for most of 2015.
U Maung Aung said the Ministry of Commerce, the Central Bank, and law enforcement agencies from the Ministry of Home Affairs are watching for price spikes in specific commodities, intending to take action against those who purchase large quantities with no intention of using them productively. However, U Maung Aung did not detail how this will work in practice.
Local gold prices have also creeped upward. Internationally, spot gold sold for $1205 a troy ounce yesterday, and has held steady for most of May. Locally, prices have slowly climbed this month, trading yesterday at K710,000 a tical (equal to 0.576 ounces or 0.527 troy ounces), compared with K660,000 a tical in late April.
Central Bank officials have said they are responsible for the stability of commodity prices.
“We are watching and calculating the market price to see if changes are normal or not,” he said.
Price growth particularly in gold and dollars has been larger than international trends would suggest, though authorities have not yet directly intervened to manipulate prices, the official said.
“If the situation continues to excess, we have some plans to intervene in the market,” he said.
Many local markets are open to manipulation. Some investors take a position in a currency or commodity, then spread rumours to their favour before selling, he said.
“Prices don’t shake too much with first time sales, but they will if large positions are taken. Much of the money currently entering dollars and gold may later flow to other areas like property, so we don’t think current levels are permanent. Though if not, we will intervene,” he said.
Origin
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