New Delhi (Mizzima) – An order by the Burmese government is preventing gold traders from speculating despite record high prices on the global market, gold merchants in Rangoon said.
Previously, the gold price in Burma depended on the price fluctuations in the global market.
However, in early July the gold price on the global market was US$1,480 per ounce (1 ounce= 1.76 ticals); on July 19, the price reached a record high of US$1,602. Since then, the Burmese government has forbidden gold merchants from speculating on gold prices.
The current gold price in Burma, 662,500 kyat (about US$ 828) per tical (about 16 grams), is 10,000 kyat lower than the price on the global market. If the Burmese government had not forbidden gold merchants from speculating, the gold price could reach 680,000 kyat per tical, according to estimates by gold merchants in Rangoon. Now, despite the stable price, gold trading is sluggish, according to sources.
“Earlier when the price in the global market was increased, the price in the local market was increased too. Now the merchants can not increase,” said a gold shop owner from Shwebontha Road in Pabedon Township. “To control the price, the authorities do not allow 'laypakkar' [‘Laypakkar’ is a method for speculation in which gold brokers and merchants estimate the possible fluctuation of local gold prices based on the possible fluctuations in the gold price in the global market and then buy gold by making a promise that they will make payment later]. Because Myanmar [Burma] currency is strengthening, people do not want to buy gold.”
On July 21, 7 Day News reported that Rangoon Region gold businessmen’s association secretary Win Myint said that the authorities told gold merchants not to make “laypakkar” and speculate in the local gold market. Mizzima tried to contact the association, but could get no response.
A member of the gold businessmen’s association said on the condition of anonymity:
“If there is ‘lakpakkar,’ there will be considerable fluctuations. If the price in the global market is likely to be increased, the price is usually increased in our trading, too. The speculators often trade about several viss (1 viss = nearly 1.6 kg) of gold and they often pay the following morning,” the member said.
He continued, “The price increase is not just because of 'lakpakkar' (speculation); it is also because of fluctuations in the dollar price and gold price in the global market. If the gold price on the global market is increased, nothing can control the local price not to be increased. Otherwise, people will sell gold (to other countries) via border areas.”
The gold price on the global market was US$1,588 on Friday. In Burma, the high quality gold price is 664,500 kyat per tical; the lower quality gold price is 663,000 kyat per tical.
Now, the exchange rate for one US dollar has fallen to below 800 kyat per dollar, which is another reason that the gold price in the Burmese market did not increase. Because of the relatively low gold price in Burma, it is likely that some people sell gold to neighbouring countries, especially China, through border areas, traders said.
On Friday, the currency exchange rate was 785 kyat per 1 US dollar.
