SOME exporters are not earning
a remarkable profit, in spite of
the fact that the US dollar exchange
rate hit a record high of
Ks1,475 per dollar in the floating
exchange rate system on 7
“Exporters are believed to get a handsome profit due to soaring dollar exchange rate. However, it is like reaching a breakeven point as they have to purchase imported goods such as packing materials, ingredients at the current US dollar rate”, said U Ye Myint Maung, general secretary of Myanmar Food Processors and Exporters Association.
The US tariff hike on China in the escalating trade war is affecting other countries. The country needs to prirotize export promotion and import substitution businesses by drawing up export-oriented strategy in a bid to control high dollar exchange rate and inflation, he maintained. With the dollar exchange rate gaining, commodity prices are surging. Therefore, exporters also have to scale up the purchase of price in the supply market.
Daw Toe Nanda Tin, vice chair of Myanmar Fishery Products Processors and Exporters Association commented that “exporters usually make profit with dollar appreciation but there is no significant increase in profit while import rises. Both exporters and importers want stability of exchange rate.
Export is meant to attain hard currency earnings and so, we need to boost export. If import outdoes export, the value of foreign currency will keep soaring”.
Starting from mid-January, a US dollar exchange rate dropped to Ks1,322. The rate fluctuated around Ks1,327 between January and April and it hit the highest of only Ks1,331. In May, it picked up to above Ks1,340 and soared to above Ks1,390 by the end of June. The exchange rate reached Ks1,410 in mid-July and this year’s highest record of Ks1,470 in the first week of August.
The government should prioritize export market in the respective sectors in order to earn foreign currency.
Most of the large exporting countries implement export subsidies such as tax relief and incentives to enhance the country’s competitiveness in the foreign markets, said the businessmen. The Central Bank of Myanmar (CBM) is gradually raising the set exchange rate amid soaring prices in the local currency market.
The CBM set a US dollar exchange rate at Ks1,438 yesterday. In addition to this, the CBM has been selling US dollars since 27 July, and a total of US$800,000 were sold as of 7 August. The CBM is trying to govern the floating exchange rate and price manipulation, said Daw May Toe Win, Director-General of the CBM.
The inflation rate, interest rate, terms of trade, the country’s current account and deficits, political climate and economic performance are contributing factors to the decrease in the exchange rate. At present, imported goods, including pharmaceuticals, increased by 5 per cent minimum owing to the soaring dollar exchange rate.