The Thai baht has reached a six-year high against the US dollar, now hovering at around 30.2 per dollar. Thailand is the second largest trading partner of Myanmar, with trade volumes during fiscal 2018-19 amounting to US$3.8 billion, according to government data.
Just this month, the Central Bank of Myanmar and Bank of Thailand signed a memorandum of understanding to promote the use of the kyat and baht for trading at the border, according to an October 21 statement issued by the Bank of Thailand. As such, the appreciation of the baht could have an impact on Myanmar traders and consumers by making imports more expensive.
The higher exchange rate would also come at a time when the kyat has been largely stable at an average of K1522 per dollar this year. But analysts say if the trade deficit widens as a result of more expensive imports, the local currency could further depreciate.
“We still expect the Myanmar kyat to remain under pressure from a persistent current account deficit which is expected to widen from 5.3 percent of GDP in 2018 to 5.7pc in 2019 and 5.9pc in 2020,” said Heng Koon How, head of markets strategy at Singapore’s UOB Global Economics and Market Research.
