The Central Bank of Myanmar (CBM) hit a high of K1,329 against the US dollar last week, its strongest versus the dollar in almost two years.
The kyat has appreciated due to weakness in the greenback. Since the start of the year, it has fallen 3 percent against a basket of major currencies as traders bet major central banks, including in Europe and Japan, would tighten monetary policy on the back of better economies.
Confidence in the dollar has also been shaken by President Donald Trump’s political foibles, which last month resulted in the temporary shutdown of the US government.
In addition, the dollar also weakened after a major rout in the US stock market last week sent the Dow Jones Industrial Index tumbling by more than 1,000 points and 10-year Treasury yields rising to a four-year peak.
The week’s dramatic moves were stoked by concerns of rising inflation and speculation over whether the Federal Reserve and other major central banks would act quicker to raise interest rates.
Still, the dollar stabilised last Friday for its strongest week against a basket of currencies in nearly 15 months as some traders piled into the greenback in a week of tremendous swings felt in stock and bond markets around the world.
Last Friday, the CBM brought down its reference for the Myanmar kyat to K1,330 against the dollar, from K1,329 earlier in the week. The dollar received support after Congress and US President Donald Trump approved a federal budget plan that ended an overnight federal shutdown.
“Overall, it’s just a highly volatile environment where the idiosyncratic things that drive the market – fundamentals, economic data – are taking second stage … Everything is becoming much more correlated in a very volatile environment,” Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York, told Reuters.