FEC prices show downward trend

Friday, 26 February 2010 21:22 Khai Suu

New Delhi (Mizzima) - Foreign Exchange Certificate (FEC) prices have been falling over the past one month, traders said.

In December 2009, the FEC price increased from Kyat 970 against the US dollar and touched the highest of Kyat 1,060 in January this year. It fell gradually and reached Kyat 1,020 on February 24 and closed at about Kyat 1,000 today - a Kyat 20 decline.

"FEC price was Kyat 1,020 on February 24 and Kyat 900 yesterday. But it closed today at Kyat 1,000, a trader at the Money Exchange market in Rangoon told Mizzima.

A woman trader also said that the FEC price fell by Kyat 20 during the last two days.

When high FEC prices prevailed from December last year to mid-January this year, the military regime went into privatization of State owned enterprises and assets in FEC.

But after fuel shops and import of fuel were privatized last year, the price of FEC fell gradually.

When the oil and fuel import business was controlled and monopolized by the State, the fuel and oil importers had to pay in FEC at the bank account of the government Energy Ministry. Now that the business has been liberalized and privatized, the importers do not need to pay in FEC. They need only the US Dollar. So the demand for FEC in the market fell.

"Now many business ventures have been privatized and liberalized by the State so businessmen do not need to apply for permits by paying in FEC. So the demand for FEC declined," a businessman in Rangoon said.

"The FEC price fell probably because of privatization of diesel import. Moreover in government auctions, FEC was needed to make payments leading to its high demand. Now there are no auctions so FEC prices are down," a currency trader said.

An economist from Rangoon speculated that besides the privatization of oil import, there may be other hidden reasons behind the falling FEC price.

FEC or USD can be used in export-import business, paying internet bills, phone bills and buying international air tickets.

The FEC was first issued in 1993 by the junta's Central Bank of Burma which guaranteed a parity of price between FEC and USD. FEC is issued in 1, 5, 10 and 20 denominations.