Economist Dr U Myint warned that the currency crisis that may overthrow a government, should not be underrated, at a talk on "the currency exchange rate” at Union of Myanmar Federation of Chambers of Commerce and Industry in Yangon on August 4.
Dr U Myint pointed out the local currency depreciation in comparison with Indonesia’s currency crisis in 1997 and 1998.
“The root cause in Indonesia was currency problem. Then financial problem became economic problem, social problem, political problem and security problem step by step, resulting in the fall of the government. So we should not underrate currency,” he added.
In the time of the ruling National League for Democracy-led government, the value of local currency hits a record low. There is no healthy business environment for entrepreneurs. The country faces the most severe economic downturn in 2018, according to the UMFCCI.
On August 3, the value of Chinese yuan went down due to the mounting trade war between US and China. The value of a US dollar hit Ks-1,462 in the local market. The central bank’s reference rate was Ks-1,431 per dollar. Within 50 days, the value of local currency has dropped by about nine per cent. On April 1, 2012, the value of a US dollar stood at Ks-1,216.
On August 4, U Than Lwin, former vice governor of the central bank and senior adviser at Kanbawza Bank said: “Due to rampant exchange rate fluctuations, foreign investors will not make investments. Mahathir said it needs to stabilize the currency exchange rate. There should be currency rate fluctuations in an economy. Gradual changes in exchange rate is common. As Dr U Myint said, an increase in currency exchange rate within 15 months is not a problem. It increases gradually within 15 months and one year. The 10 or 20-per-cent increase within few days is very dangerous.”