Friday, November 21, 2008

FEC slumps in Burma

by Phanida
21 November 2008

Chiang Mai (Mizzima) – The price of Foreign Exchange Certificates (FEC) slumped sharply by Kyat 40 in Rangoon.

During last month's trading, one unit of FEC could fetch Kyat 1,230 in Burma's black market. Today it fell to Kyat 1,190.

Economist U Khin Maung Nyo said the people prefer to buy international hard currency the USD rather than the FEC which can be used only in the Burmese market. It also has limited demand in the domestic market.

"Currently there is no demand for FEC in the market. There is no significant trading of FEC by the government either. It can be used only in limited cases such as buying fuel. Even though a price of the USD is falling in the global market, the people prefer to retain the international hard currency," he said.

In official exchange rates, one unit of FEC is equivalent to 1 US dollar. But in the black market, the FEC price is usually lower than the US dollar. At the moment the difference in prices of these two currencies is widening significantly.

A foreign exchange trader in Rangoon said that traders in the market suspended the buying of FEC for fear of further fall of its price.

"The price of the USD rose and the FEC fell. The difference of USD and FEC was just between Kyat 5 and 10 last month and now it has risen to Kyat 50. So we suspended buying FEC for the time being, fearing a further fall. Some said it will rise again," he said.

The junta has started a new scheme of selling fuel at the rate of four FEC units per gallon at government-run filling stations since August 22. But the fuel price is falling in the black market in Burma and only few people are buying fuel with FEC, the staff at government petrol shops said.

In the black market in Burma, diesel price fell to Kyat 3,300 per gallon from the earlier 4,000 and petrol price fell from Kyat 3,700 to Kyat 3,100.

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