Myanmar's currency collapsed, breaking lows and breaking records
According to news from the domestic and foreign currency exchange markets, the exchange rate of one U.S. dollar exceeded 1,800 kyats for the first time recently, but the demand for U.S. dollars in the market has only increased. Before the political turmoil, the exchange rate of one U.S. dollar was only 1,337 kyats.
In the past six months, the kyat exchange rate has fallen by about 34.6%. Whether it is a legal exchange agency or in an underground bank, the exchange rate of kyat to the US dollar has broken historical records.
A few days ago, the vice chairman of the central bank, Wu Wenduo, said in an interview with the media that in order to regulate the domestic foreign currency exchange rate, the central bank will put in auction US dollars on August 23. The exchange rate of one US dollar is 1,650 kyats. The central bank’s auctions are targeted for the pharmaceutical, fuel, and palm oil sectors, and do not include exchange agencies for ordinary people.
A businessman engaged in currency exchange in Kammayut Township, Yangon said that sellers now set prices in the market, and buyers buy as soon as they find it suitable, and they conduct transactions in this way.
From August 16 to August 22, banks across the country suspend operations in accordance with the instructions of the central bank. Because the exchange rate of the U.S. dollar is fluctuating, the domestic exchange agencies no longer update information about foreign currency transactions.
Affected by the rise in the U.S. dollar index, on the morning of August 17, the price of domestic gold rose to 1.7 million kyats. In the afternoon, the price of gold fell to 1,664,000 kyats.
In recent months, in order to regulate the domestic US dollar exchange rate market, the Central Bank of Myanmar has repeatedly invested tens of millions of US dollars. In July alone, the central bank auctioned more than 39 million US dollars in 12 auctions. In recent months, more U.S. dollars have flowed into the domestic market, which to a certain extent made up for the demand of Myanmar's domestic exchange rate market.
Affected by the rise of the US dollar exchange rate index, in addition to the record-breaking increase in the US dollar exchange rate, the foreign currency exchange rate of the kyat against other countries also rose slightly.
The Thai baht becomes the worst performing currency in Asia
According to the Bangkok Post, the Thai baht has continued to depreciate against the U.S. dollar in recent days. The Thai baht has depreciated 10.4% this year, making it the worst-performing currency in Asia.
According to the weekly trend of the Thai baht released by the Ayutthaya Bank Global Business Unit, it is expected that the fluctuation range of the Thai baht against the US dollar for the week of September 9-13, 2021 will be 33.30-33.60 baht. In the past few days in August, the central parity of the Thai baht against the US dollar has also been at a new low in the past three years, but the reason for the continued depreciation of the Thai baht is pressured by various factors.
In terms of external factors, the Fed hinted that it would end the loose monetary stimulus measures ahead of schedule, which had a considerable impact on the capital market. The Bank of England’s increase of the benchmark interest rate from the previous 0.10% to 0.50% also caused investors to worry about the market outlook.
In terms of internal factors, the Bank of Thailand decided to maintain the 0.50% policy interest rate unchanged at the latest regular meeting with 4 votes in favor and 2 votes against it. At the same time, it also sharply lowered GDP expectations to signal to the market that the economy will decelerate.
The Ayutthaya Global Business Department believes that there are many signs that the Bank of Thailand may activate the interest rate cut button before the end of the year to stabilize the economy and avoid the subsequent impact of a sharp drop.
The head of the National Shippers' Association of Thailand stated that the depreciation of the Thai baht will promote the continuous rise of Thai exports and predicts that Thai exports will increase by 10% this year. The head of the Thai Chamber of Commerce believes that the depreciation of the Thai baht will not only bring benefits to exporters, but also enable farmers to obtain more income. If Thailand can successfully alleviate the epidemic, exports may achieve a 15% growth this year.
Multi-national currencies fell against the U.S. dollar
Capital Economics macro economist Thomas Mathews said that although the U.S. foreign asset position and large current account deficit indicate that the U.S. dollar has been "somewhat" overvalued, the U.S. dollar is likely to rise further in the next 6-12 months; he wrote It is said that the rise in the US dollar is due to the fact that US yields have risen faster than other advanced economies, and this situation is expected to continue.
According to the minutes of the meeting released by the Federal Reserve, policymakers basically expect to slow down the monthly bond purchases later this year.
The Australian dollar hit a new nine-and-a-half-month low of 0.7107 U.S. dollars against the U.S. dollar, and fell 0.14% to 0.7137 late in the day. Last week, the Australian dollar fell by 3.16%, its worst weekly performance since September 2020.
The New Zealand dollar against the US dollar hit a nine-month low of 0.6805 US dollars. The New Zealand government extended the strict anti-epidemic lockdown imposed across New Zealand. The lockdown caused the Federal Reserve of New Zealand to postpone rate hikes this week.
The Canadian dollar once touched an eight-month low of 1.2949 Canadian dollars against the US dollar, as concerns about the global economy led to further declines in oil prices. The US dollar/Canadian dollar is in the most overbought state since March 2020.
The Norwegian Krone fell for the second consecutive day due to lower oil prices and general nervousness among investors, even though the Norges Bank insisted on its plan to raise interest rates in September. The euro was flat against the Norwegian Krone at 10.56 kronor in late trading.
The euro rose 0.21% to 1.1699 against the dollar. The euro climbed as its short position decreased; but it was not far from the nine and a half-month low of 1.1665 hit overnight.
The pound against the US dollar hit its lowest in a month, falling 0.12% in late trading to 1.3622.
It can be seen that the impact of the US's large-scale water release on the world is still continuing...
