Myanmar’s domestic gold prices reached MMK 1.3 million per tical (about 16.33 grams) on September 5th. It has been the highest rate this year. Economic uncertainty and the rising value of the dollar against the kyat are thought to be driving investment in Gold.
The rise in gold prices corresponds with rumors of an epidemic of non-performing loans in the banking sector. These fears seemed to have been sparked by remarks from U Soe Thein, deputy governor of the Central Bank of Myanmar (CBM). He stressed the need to crack down on the large amount of unpaid loans. A week later, on September 2, the Central Bank of Myanmar (CBM) attempted to put the rumors to rest. A statement was released calling itself the “lender of last resort”. The CMB said that it will continue to work with borrowers to repay unpaid loans. U Soe Thein soon resigned his position.
Although Daw Khin San Hlaing, chair of the Pyithu Hluttaw’s Banking and Financial Development Committee, also denied rumors of a loan crisis after meeting with officials from the CBM, there have been long lines at banks as people scramble to withdraw money from their accounts. People are also queuing at gold shops.
“Demand for pure gold is increasing at gold shops in each township, because people are worried about the economy and the stability of banks. In my experience, gold prices will return to normal in about two weeks,” U Win Myint, the secretary of the Yangon Region Gold Entrepreneurs Association, told The Myanmar Times. Win Myint also said his association had instituted new rules requiring members to make deals only in cash. This is to reduce the impact the price surge has on the market.
