When a Worthless Currency Appreciates

Also, the garment industry, which includes 293 factories and employs 70,000-90,000 workers, and is already struggling because of economic sanctions imposed on Burma by the West, will not be able to withstand the impact of the dollar's decline.

The soaring kyat also slows remittances from abroad. Most Burmese around the world support their families at home. From Thailand alone, according to Sean Turnell, a specialist on the Burmese economy at Macquarie University in Australia, the average worker sends back around $300 a year. When the value of these remittances falls, hundreds of thousands of poor Burmese families lose an integral means of support. The majority of remittances received are spent on daily living expenses, followed by expenditure on housing, education and health.

Perhaps the most telling sign of the poor health of the Burmese economy is the fact that, despite the rising value of the kyat, most Burmese consider their national currency essentially worthless. Members of the nearly non-existent middle class—those who manage somehow to rise above mere subsistence— all aspire to send their kids to school in Singapore, Malaysia or Thailand or to move to these countries themselves. It's the only way, they say, that they can enjoy real purchasing power, without being squeezed by ludicrously high duties on the sort of imported goods that most people of moderate means take for granted.

Clearly, then, the recent rise of the kyat has brought little benefit to anyone. Just as the growing strength of a handful of generals over the past two decades has only weakened the country as a whole, the strong kyat only serves to remind us of the underlying weakness of one of the world's worst-managed economies.