End of July 2023, CBM printed for the first time, 20,000 Kyats notes, in commemoration for the completion of the Maravijaya Buddha image and one-year birthday of a rare white elephant. CBM specifically states it was a commemorative print and the printed new notes will only be issued in exchange for the current worn-out notes in circulation. Yet a signaling theory was witnessed in action. The market is flushed with news of uncontrolled printing of money, a government losing control of the country and its monetary system, unconstrained rampant potential inflation, businessmen stopping the sale of basic necessities, $ and gold prices hitting new highs and the general population scrambling for scraps. 100% negatives with an everlasting supply of misinformation in social media and anti-establishment fake news agencies. Q.E.D.
Obviously printing money aka quantitative easing, or increasing the money in circulation without changes in economic fundamentals always represents a risk to economy. There will be potential inflation due to increased money availability, which could lead to a devaluation of Kyats. There are also additional costs of printing and administering the distribution of the new notes, a cost born out of budget by taxpayers. The exporters will benefit and importers will suffer, due to depreciation of Kyats. The financial services sector also bears the cost, with adjustments to ATM, CDM (Cash Deposit Machines) and other vending machines. There is also immeasurable psychological impact on public confidence and perception of Myanmar Kyats. The eventual economic implications would be determined by the scale of denomination change.
The only positives that can come out of new currency print would be to ease currency shortages in specific denominations and addressing counterfeiting concerns and security measures.
Alas, the government is not increasing the money supply!!! As yet, NNCP cyber terrorists and their lap dogs keyboard warriors ganged up together to attack the government and its apparent incompetence in management of the country. What a deja vu! Just like indiscriminate targeting of boycotting Myanmar companies for apparent association with the military or lynching or carrying out mob justice through killing of innocent civilians, retirees or civil servants, history has a chance to repeat itself, again and again.
At the time of print, the $ rate has gone through the roof to nearly 3,600 Kyats (increase of ~25%, from before the announcement of the new note) and domestic gold price has gone up around 20%. The economic fundamentals of Myanmar simply does not support that abrupt change. The government is aiming for a moderate growth this year of 4% and the fundamentals have not changed to suggest an alteration to this forecast.
Businesses are trying to get back to normal, picking up the pieces. NNCP firebrands are on the retreat. Donations for their terrorist activities are dwindling. After failure of their reputed lottery and ostensible sale of lands and properties that they do not own (including the land inside the Mandalay palace), they have started another scheme called ‘Spring Bank’ to start defrauding ordinary people, through collection of deposits.
Projects are restarting, including the large Yoma Central project downtown. Rentals are on the increase with noticeable increase in demand and viewing of available rental units. Yet, there are those who want Myanmar government and its people to fail. There is even one diplomat who purposely went to the grave of terrorists and show the support for them, within hours of landing in the country. What an ignoramus!
Hence, do not lose heart. The Kyat is in oversold territory right now. The $ and gold prices would fall back. There is no economic theory that support such fluctuations, other than market manipulation. By getting back to the basics and through hard work, we would get back to our accustomed way of life and be on the growth track in no time.