The Central Bank of Myanmar will continue to make currency interventions following their adoption of free-floating exchange rates to avoid speculator risks, economist Hla Maung told Mizzima.
Hla Maung said the free-floating move was positive, but that Myanmar would need to take action against high-risk investors if it is to protect its early economic activity.
“It would be dangerous to let the demand and supply theory determine everything at this early point,” he said.
Dr. Aung Thura, a chief executive officer at Thura Swiss Company also pointed out that Myanmar may need to intervene directly in the near future.
He claimed that due to the large black-market operating in Myanmar, authorities will not be able to use interest rates to indirectly control exchange rates, like many other countries.
“The officials concerned have a responsibility to watch not only the exchange rates of the banks but also the currency exchange rates in the black-market,” said Dr. Aung Thura.
Others argue that privately-owned banks in Myanmar are prepared for the free-float exchange, and will not react well to intervention.
Than Lwin, the deputy chairman of Kanbawza Bank, told Mizzima that Myanmar’s currency experts are more than prepared for the financial risks associated with speculators.
“The Central Bank has experts on currency policy making,” says Than Lwin. “I believe the Central Bank has enough global reserve currency to protect itself.”
Dr. Aung Thura claims that Myanmar’s currency intervention should not be viewed as a threat, claiming that similar practices were accepted world wide. He cited the case of Swiss National Bank, pointing out that despite being one of the world’s largest banks, they were still forced to buy large amounts of Pound Sterling to jump start exports.