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In Myanmar, the US dollar is no longer “scented”.

In Myanmar, the US dollar is no longer "scented".

Chart of the number of new confirmed cases and deaths in Myanmar Day Source: Worldometers

The impact of the COVID-19 epidemic on the global order is much more than the rising number of confirmed cases and deaths.

December 24, Bloomberg said that with the government’s stay-at-home order for epidemic prevention needs, people’s disposable income has plummeted and import demand has plummeted. The domestic currency, which is mainly used to buy local products, has become a safer choice.

In contrast, the US dollar, which dominates international trade, is no longer popular, and the more it is on the edge of the global financial order, the more so it is. Myanmar is a vivid example.

Bloomberg interviewed a local who works in Yangon, a Burmese business center, whose salary has always been settled in US dollars, which makes him very happy.

But after the outbreak of the coronavirus, the dollar became chicken ribs.

“I feel safer now when I hold Burmese dollars,” he said, “because if I only have dollars, it’s hard to get things in the local market.”

The report pointed out that in this earth-shaking year 2020, the “crown” of the dollar has slipped, and its performance has lagged behind the other members of the Group of Ten (the United States, Japan, Germany, the United Kingdom, France, Italy, the Netherlands, Belgium, Sweden, Canada), which is on the edge of the global financial order. The district performs most obviously.

In Myanmar, the exchange rate of the Burmese dollar rose by up to 11% against the US dollar, becoming the best performing currency in Asia. The dollar’s “safe haven currency” status has largely given way to the local market.

Locals who mainly rely on the dollar worry that it may be difficult to buy necessities such as groceries if they don’t have Burmese dollars on hand.

This concern has been exacerbated by the epidemic situation in Myanmar itself.

Since August this year, the number of new confirmed cases and deaths in Myanmar has begun to soar. The government has continuously intensified its epidemic prevention measures, and people are increasingly relying on Myanmar dollars to buy important materials such as food and medicine instead of spending money on tourism, clothing and other fashion supplies.

Chart of the number of new confirmed cases and deaths in Myanmar Day Source: Worldometers

The World Bank’s Myanmar Economic Watch shows that the market demand for the Myanmar dollar is already increasing due to the expectation that the Burmese dollar will continue to appreciate, coupled with the possible significant impact of small trade on low-flow markets.

In order to stabilize the currency, the Central Bank of Myanmar, like the central banks of Thailand and South Korea, began to buy dollars to prevent exchange rate fluctuations from damaging the competitiveness of its exports.

The Director of the Foreign Exchange Administration of the Central Bank of Myanmar said that in the second half of this year, they bought $156 million to stabilize foreign exchange.

In recent weeks, the exchange rate of the Myanmar dollar has also fallen, as the market expects the economic recovery to boost consumption and increase demand for imported cars.

She predicts that as economic and social order returns to normal, imports may increase, when the Burmese dollar may depreciate.

The Myanmar government is also trying to accelerate the recovery. According to Bloomberg, Myanmar’s senior executive Daw Aung San Suu Kyi said that although the number of cases has been soaring recently, the Myanmar government is evaluating the gradual relaxation of restrictions in the economic field.

In early December, Myanmar has allowed township restaurants and tea shops to reopen.

According to Myanmar’s “Jinfengyu” website, Myanmar also plans to obtain $60 million, 250 million and $350 million from the World Bank, the Asian Development Bank and the International Monetary Fund respectively, and 30 billion yen in loans from the Japan Cooperation Agency to buy a coronavirus vaccine.

However, whether this means that the dollar will “return to the throne” in the future is still unknown. Locals who previously interviewed Bloomberg said that he used to reserve some dollars, but now after seeing a more fierce second wave of the epidemic, he decided to sell all the dollars for gold.

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