Myanmar: Fuel, gold prices slide on the back of lower dollar exchange rate

Local prices of commodities like fuel have weakened on the back of the sliding value of the US dollar against the Myanmar kyat following an agreement to temporarily suspend any new tariffs on goods traded between the US and China .

The trend is expected to persist for the next few months, business and economic experts say.

“This is partly the result of the current cooling in the US-China trade war, which has brought a little more confidence to the market. Although it is always difficult to forecast in the long term, economic indicators could improve over the next four to five months,” said wholesale fuel importer U Myo Htwe.

As of yesterday, retail fuel prices had dropped between K10 and K20 per liter to K855 for Ron 92 petrol, K925 for Ron 95 petrol; K1025 for diesel; and K1010 for premium diesel.

Fuel prices per liter on November 30 were K865 for Ron 92 petrol, K945 for Ron 95 petrol, K1035 for diesel, and K1010 for premium diesel.

The kyat-dollar exchange rate was K1515 for buying and K1525 for selling in local banks. It was K1510 and K1530 respectively at privately run forex counters. The rate set by the Central Bank of Myanmar (CBM) was K1540 per dollar.

In comparison, on November 30, the buying and selling rate of US dollars in local banks stood at K1569 and K1576, respectively, while in the outside market it was K1572 and K1577. The CBM rate was K1573 a dollar.

Fuel prices in September (pictured) were higher than current levels. Zarni Phyo/The Myanmar TimesFuel prices in September (pictured) were higher than current levels. Zarni Phyo/The Myanmar Times

“The current market conditions depends very much on the US and China. To really tell how much prices will fall, we will require a little more time as the current weakness in the dollar has only been taking place for a very short time,” said said U Zaw Oo, an economist.

“Markets can move based on fear. Previously prices for fuel went up due to increased demand from the fear of prices rising even more. Now, demand is falling due to a belief that prices will fall, resulting in prices also falling,” said U Myo Htwe.

Domestic gold prices have also been volatile as a result of the lower dollar-to-kyat exchange rate, according to sources in the gold industry.

Yesterday, the Yangon Region Gold Entrepreneurs Association’s opening price for gold was K1.018 million per tical (a local traditional measure equal to 16.33 grams or just over half an ounce) but prices had fallen to K1.008 million per tical at noon. That’s a drop of K10,000 in mere hours, said the association’s secretary U Win Myint.

After falling to an intraday low of K980,000 per tical however, gold prices had risen again by the end of the day as a result of global gold prices rising, said Myanmar Gold Entrepreneurs Association’s chair U Kyaw Win.

On the global gold market, one ounce of gold was US$1236 on yesterday, up from US$1225 on Tuesday, said U Kyaw Win.“Gold prices in Myanmar have fluctuated a lot since the dollar value dropped,” he said.