"1. There has been a consistent and sharp appreciation of the kyat dollar exchange rate for the past few months.3 This has caused problems. The extent of the kyat exchange rate appreciation and its impact on costs and returns in some key sectors of the Myanmar economy are presented in a paper prepared by U Set Aung4, a member of the President?s Economic Advisory Team. These matters are therefore not discussed here. Instead, three issues have been taken up in this paper. They are: 2. First, to explain why a currency?s exchange rate can rapidly appreciate and how this causes problems; 3. Second, to suggest measures that are to be undertaken immediately to deal with the kyat exchange rate appreciation problem presently facing Myanmar, in order to restore business and investor confidence in the exchange rate, and to prevent the situation from getting out of hand; and 4. Third, the current kyat exchange rate problem presents a good opportunity to initiate the process of reform of the exchange rate regime in Myanmar. The objective of the reform is to establish a foreign exchange market in Myanmar that meets international standards and where the exchange rate is relatively stable, is market-determined, and becomes a useful tool of macroeconomic management for the Central Bank of Myanmar. A suggestion on how to start this reform process is briefly presented in this paper..."