Myanmar's currency has lost more than 60 per cent of its value since the beginning of September in a collapse that has driven up food and fuel prices in an economy that has tanked since a military coup eight months ago.
"This will rattle the generals as they are quite obsessed with the kyat rate as a broader barometer of the economy, and therefore a reflection on them," said Richard Horsey, a Myanmar expert at the International Crisis Group.
In August, the Central Bank of Myanmar tried tethering the kyat 0.8 per cent either side of its reference rate against the US dollar, but gave up on Sep 10 as pressure on the exchange rate mounted.
The shortage of dollars has become so bad that some money changers have pulled down their shutters.
"Due to the currency price instability at the moment ... all Northern Breeze Exchange Service branches are temporarily closed," the money changer said on Facebook.
Those still operating were quoting a rate of 2,700 kyat per US dollar on Tuesday (Sep 28), compared to 1,695 kyat on Sep 1 and 1,395 kyat back on Feb1, when the military overthrew a democratically elected government led by Nobel laureate Aung San Suu Kyi.
In a report published on Monday, the World Bank predicted that the economy would slump by 18 per cent this year, partly due to the COVID-19 pandemic, and said that Myanmar would see the biggest contraction in employment in the region and a rise in the number of poor in the country.
The increasing economic pressures come amid signs of an upsurge in bloodshed, as armed militias have become bolder in clashes with the army after months of protests and strikes by opponents of the junta.
"The worse the political situation is, the worse the currency rate will be," said a senior executive at a Myanmar bank, who declined to be named.
Myanmar is also struggling to deal with a second wave of COVID-19 cases that started in June with the response by authorities crippled after many health workers joined protests. Reported cases have come off their highs, though the true extent of the outbreak remains unclear.
Stay-at-home orders in some townships have been withdrawn, but are still in effect in some areas.
In the immediate months after the Feb 1 coup, many people queued up to withdraw savings from banks, and some bought gold, but a jewellery merchant in Yangon said that many desperate people were now trying to sell their gold back.
The central bank gave no reason to why it abandoned its managed float strategy earlier this month, but analysts believe its foreign currency reserves must be seriously depleted.
Central bank officials did not answer calls seeking comment on how much foreign currency was left, but World Bank data shows it had just US$7.67 billion in reserves at the end of 2020.
After coming off its managed float, the central bank still spent US$65 million, buying kyat at a rate of 1,750 to 1,755 per US dollar between Sep 13 and Sep 27.
The bank executive said that the central bank's efforts had limited impact in a currency market shorn of confidence.
The economic crisis has driven up the price of staples, and the United Nations Office for the Coordination of Humanitarian Affairs said this week that around 3 million people now require humanitarian assistance in Myanmar, up from 1 million before the coup.
A 48kg bag of rice costs 48,000 kyat, up nearly 40 per cent since the coup, while gasoline prices have nearly doubled to 1,445 kyat per litre.
The crisis is also hurting businesses, particularly those needing to import raw materials. A plastic bag manufacturer in Yangon said that he had been forced to increase prices, and sales had dropped about 30 per cent.
Per capita gross domestic product was just US$1,400 last year, and Zaw, a resident in Yangon who asked to use only part of his name, was under no illusion about where Myanmar was heading.
"People will become poorer," he said.