CNI News
3 Sept 2022
To tackle the depreciation of the kyat against the US dollar, it is necessary for the Central Bank of Myanmar to inject US$ 200 million every month until the US dollar depreciates, political observers and economists told the CNI.
After the Central Bank of Myanmar announced that it would provide US$ 200 million to address the rising prices of basic food items due to increases in fuel prices, US$ exchange rates and fuel prices dropped a little.
Therefore, it is necessary for the CBM to inject US$ 200 million into the market every month until the US dollar depreciates to provide true fuel oil importers, Political Observer U Ye Tun told the CNI.
He told the CNI, “I came across a report that the CBM will provide another US$ 200 million next month. If it is true, it is a good step and the situation could return to normal. When US dollar prices fall back to the official exchange rate, the CBM no longer needs to inject the US dollar into the market. It is an attempt to lower fuel prices. However, it is important for the CBM to sell the US dollar at the official exchange rate of MMK 2,100, which is much lower than market rates, to true fuel importers.
The Central Bank of Myanmar. (The Myanmar Time)
As Myanmar needs to import fuel worth about US$ 400 million every month, recent injection of US$ 200 million by the CBM is likely to have short-term impacts only, said economists.
Fuel oil imported from Russia is the only hope for Myanmar to lower fuel and US dollar prices, an economist, who requested anonymity for safety concerns, told the CNI.
He said, “As Myanmar needs US$ 400 million worth of fuel oil every month, US$ 200 million is enough for half a month. So, it will have short-term effects only. It is difficult for the CBM to inject the US dollar into the market in the long run because it has limited foreign reserves. So, the only hope for them is to lower fuel and US dollar prices is fuel imported from Russia. Half a month’ consumption of fuel oil will deplete in two weeks and it is difficult to inject the US dollar in the long run. They injected US$ 200 million to lower the prices of the US dollar, which jumped up exponentially. Fuel prices resurged to MMK 2,300 per litre yesterday and MMK 2,500 per litre today.”
A filling station.
At present, there is a wide gap between the official exchange rate set by the CBM and black market rates and the prices of imported goods have increased exponentially, pushing up the prices of basic food items.
To tackle the rising prices of basic food items caused by the surging prices of imported fuel, the CBM announced on 31st August that it would inject US$ 200 million into the foreign currency market with the approval of the Foreign Exchange Supervisory Committee.
