The Effects of Financial Liberalization in Myanmar and its Implications for Exchange Rates & Monetary Policy

• Main Author: Tun, Win Lei Lei
• Format: Others
• Published: Scholarship @ Claremont 2019
• Subjects: exchange rate; liberalization; myanmar; Macroeconomics
• Online Access: https://scholarship.claremont.edu/cmc_theses/2220; https://scholarship.claremont.edu/cgi/viewcontent.cgi?article=3224&context=cmc_theses

This thesis studies the factors driving the movement of Myanmar’s reference exchange rate against the dollar during its managed-float currency regime from 2012 to 2018. Time series and event study analysis are used to assess how reforms have affected the value of the Myanmar Kyat. The exchange rate policies and movements of nearby Asian currencies over the same sample period are also considered to determine whether the depreciation of the Myanmar Kyat parallels that of the others (Chinese Renminbi, Vietnamese Dong, Thai Baht, Cambodian Riel, and Singaporean dollar). The results show that the Myanmar Kyat is significantly influenced by US inflation and the Myanmar’s 2015 general elections, and that the Kyat is indirectly influenced by the Renminbi and the USD, through the currencies’ effects on the Dong. Comparing the M2/GDP and stock market capitalization to GDP ratios showed that Myanmar’s market lags behind its Asian counterparts. However, the government treasury bond market launched in September 2016 and the stock exchange launched in December 2015 offer hope for secondary trading and a deepening of the financial sector in the future.