New Myanmar banknotes may spur infl

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Subject: New Myanmar banknotes may spur inflation 

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New Myanmar banknotes may spur inflation 

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MYANMAR is to issue 1,000-kyat banknotes next week in a move which some
observers here warn may spur already mounting inflation in the military-run
state. 

The new notes, which will be the highest denomination in circulation, come
amid warnings from analysts and diplomats that the economy has reached
crisis point, crippled by sanctions and Asia's financial storm. 

"I have watched the monetary situation here over the past 35 years and can
say for sure that the latest government move will have an adverse effect on
the open exchange rate as such moves have done before," said one local
businessman. 

The new notes are to be put into circulation on Nov 25 by the central bank,
TV Myanmar said Wednesday. 

Businessmen said that when the 500 kyat note was issued several years ago
the black market exchange rate took a sharp nose-dive in relation to the US
dollar amid the ensuing panic. 

The highest denomination is currently 500 kyat, but the currency has been
rapidly devalued amid Asia's crisis. 

The official exchange rate remains unchanged at six kyat to the dollar but
the currency was changing hands on the black market yesterday for 340. When
it hit the 400 mark this year, some foreign exchange dealers were arrested,
analysts say. 

But reaction to the announcement of a new note has been mixed. "It's a
welcome step for some of us who make huge cash transactions and have to cart
around huge amounts of lesser notes," another businessman said. 

Rampant inflation means bills must be paid with wads of cash, foreign
exchange coupons and dollars. 

Though the junta estimates inflation at 24 per cent, economists here put the
true figure at between 30 and 60 per cent. -- AFP 


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