Weak dollar hits Burma aid work

Falling US dollar prices have meant that domestic NGOs in Burma are unable to carry out infrastructural activities vital to peoples’ wellbeing, the head of a Rangoon-based aid group has warned.

Earlier this month the exchange rate hit a low of 780 kyat to the dollar, and businessmen in Burma are expecting that to decrease further over the coming months. The US is struggling to recover its housing and labour markets, and economic growth remains sluggish, although currency restructuring is underway to help boost exports.

Many NGOs in Burma rely on funding that comes in US dollars, which for decades has been used as the de facto second currency – as it has been globally – given its stability compared to the kyat. As the dollar weakens against the kyat, operational costs are effectively forced up. Prior to the global financial crash, the exchange rate hovered around 1000 kyat to the dollar.

“Usually it would cost us around 1.6 million kyat, which had normally been about $US1600, to dig a well, but now this will work out at around $US2000,” said Dr Hpone Win, head of Mingalar Myanmar, an independent, non-profit sustatinable development organisation in Burma.

“So we have to reduce the amount of wells and lakes we are digging. For example, we may only be able to dig wells in about eight or nine villages from an initial plan of 10 villages.”

He added that NGOs were also struggling to pay transportation fees in Burma, which have stayed at the same price while their funding has decreased.

Numbers of business owners in Burma are fearful that the exchange rate will drop to 700 kyat to the dollar as the quantity of US currency in the country increases following massive sales in the recent Naypyidaw gem fair.

There are around 20 Burmese-run NGOs operating inside the country, as well as a number of international aid groups who are permitted to work, albeit with limited mobility, by the ruling junta.

Such fluctuations in currency have prompted many to speculate or suggest that the world economy moves away from sole use of the dollar as a universal currency. Commodities such as oil are priced in US dollars, but as Chinese President Hu Jintao visits Washington, the sense of a seismic shift in currency usage is palpable, with World Bank chief Robert Zoellick even suggesting a modified gold standard to maintain stability through turbulent currency times.

Additional reporting by Joseph Allchin

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