August 13 2022

Impacts of soaring dollar price, gold prices and fuel prices

The central bank’s dollar exchange rate was set to increase on August 5, and within a few days, the price of fuel suddenly increased by 300 Kyats per liter, then rose to over 500 Kyats a week later, and it became difficult to buy fuel. It was heard that in small towns and cities, the prices had increased 1-2 times than in Yangon. The news reported that the petrol price rose up to 4,500 Kyats per liter in Northern Shan cities like Lashio and Muse. In Yangon, where the fuel began to arrive, the lowest price of petrol is over 2,200 Kyats per liter.

We saw various scenes in which private petrol and diesel stations in Yangon only had diesel but no petrol and between 2 types of gasoline; 92 & 95, only 92 available and some stations didn’t have any, so they put up a sign that they were out of fuel. There were many photos of motorcycles and cars queuing for fuel in Mandalay on social media.

Social media pages were full of news about fuel being difficult to buy in Mawlamyine, Mandalay and Lashio. In order to go to work, to the market and to do transport goods, the prices had suddenly risen again, and there was uproar about getting fuel, which was difficult to buy.

At the same time, the exchange rate of the Myanmar Kyat and the gold price were rising hourly within a day. The dollar exchange rate rose by 3,000 Kyats within hours, and the gold price rose to over 27 Lakh in Kyats. Although it may be said that the dollar and gold are not directly related to you because everyone does not need to buy them, these exchange rates will change the prices of other imports over days, not hours.

There are many questions such as when this significant depreciation of Myanmar Kyats will stop, why it happened, who will be affected the most, how it can be solved or whether the economic crisis can be used for political gain.

I think the no.1 question; when will the currency depreciation stop, is still a question that no one can answer. Only if there is proper handling and solving after knowing the cause, the decline in value will stop.

However, the possibility of solving above points is unlikely in the hands of the military council. The loss of faith in the military council, which is driving the country as a government, is also one of the main political reasons for experiencing economic crisis.

The central bank’s statement in early April, ordering all foreign currencies to be converted into Myanmar Kyats in every holder’s account, was the start of this sudden Myanmar’s decline. If the Central Bank’s statement was issued because foreign currency in the hands of the military council was depleting, then it must be concluded that the root of the problem itself was Myanmar Military.

Otherwise, if it was issued as a preventive measure because of the possibility of facing the same fate as Sri Lanka, then it should be said that the order itself was creating far worse consequences.

Dollar trading for exports and imports businesses has gone into black market due to such restriction by the coup military council and it also cause complications and delays not only for importers but also for exporters, and worries about the Myanmar Kyat will fall again. It may be due to the facts that people rush to buy foreign currency on the outside market instead of with their bank accounts. Or it may be that unexpected rises in prices are due to the opportunistic purchase of foreign currency by bracket marketers.

Only those who have access to right information could evaluate what is pushing for more crisis and, as for outsiders like regular folks, they could only try with their guts and act to avoid worse consequences and some small business owners could only raise prices in what they sell daily.

Changes in currency values and high fuel prices affect transportation, business processes and manufacturing. This leads to a reduction in job opportunities and an increase in the cost of livelihood. While experiencing this economic crisis, inability to work in agriculture due to the regional unrest, and decrease in agricultural output due to the rises in the costs of transportation and fertilizer imports will cause further damage in a vicious circle.

Although there is a question that if this economic crisis could be used as political catalyst to overthrow the coup-council, it needs to be considered with current decline in law & order of the state and on going multiple crisis facing in war-torn country sides which could be having to deal with future rebuilding of country more than difficult.

#Credit : Radio NUG

#Credit : MoeMaKa


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