Burma's currency, the kyat, has plunged more than 17 percent against the dollar over recent days, in the latest shock to hit the military-run nation's crippled economy, traders and analysts say.

The recent introduction of a money-laundering law, the prospect of Thai border checkpoints reopening from Sunday and a continued crackdown on illegal currency trading are all contributing to the kyat's fall.

"Never mind that the dollar is not doing well elsewhere... it is a scarce commodity (here)," said one small importer.

Burma Economic Holdings, a military-owned corporation, has also ventured into the market to purchase dollars in recent weeks, observers said, fuelling the decline.

The non-convertible kyat has been trading on Yangon's black market over the past three months at around 850 to the dollar, but dropped to more than 1,000 kyat when the market closed Wednesday, rivalling its record lows.

The currency rose slightly on Thursday, and opened at 990 to the dollar Friday.

Yangon's "Law to Control Money and Property Obtained by Illegal Means" came into effect in June, giving a special committee wide-ranging powers such as access to bank accounts and permission to investigate personal income, property deals and money derived from ill-gotten gains.

"Since the enactment of the money-laundering law they (border traders) do not want to move such big amounts (between accounts) for fear of inviting official scrutiny... so they're turning to dollars, whatever they can get," one Yangon analyst told AFP .

Clamour for dollars

The prospect of the Thai border crossings reopening shortly, after a three-month closure sparked by clashes between Burmese troops and a rebel militia, is also increasing demand for the greenback.

Traders who have largely been shut down during the diplomatic row caused by the border fighting are expected to clamour for dollars which are the preferred currency for their businesses.

But observers also said that demand along all of Burma's borders has generally been boosted.

"The fact is that the demand for the greenback has increased, especially at the borders with Thailand, India, China and even Bangladesh, where businessmen holding greenbacks get better exchange rates," another analyst said.

Burma has a multi-tiered monetary exchange system, with the official rate set at 6.5 kyat to the dollar, but with most trade occurring at the fluctuating black market and export-dollar rates.

The latter is paid by importers, who must follow a law stipulating that only dollars earned through exports may be used for imports, meaning importers must search out exporters and pay them for the currency.

One importer told AFP he is currently shelling out 1,080 to 1,100 kyat for each export-dollar, the highest he has ever had to pay.

First dropped in March

Burma also uses dollar-denominated currency notes called Foreign Exchange Certificates (FECs), which have plummeted in value along with the kyat.

The kyat first dropped substantially this year in March, when news broke that four family members of former dictator Ne Win had been arrested for attempting to mount a military coup.

After a period of relative stability at 720 kyat to the dollar, the exchange rate slipped to a low of 820 kyat.

A month later, the currency dropped to more than 1,000 for a variety of reasons, including the junta's introduction of a ban on foreign-owned trading companies holding import and export licences.

The rate then recovered slightly, particularly after the May release of pro-democracy leader Aung San Suu Kyi.

The currency has also been rocked by periodic rumours that the government is about to withdraw high-denomination banknotes. Myanmar's citizens have suffered three disastrous bouts of demonitization, the most recent in 1987.

The jitters reflect the general mood in the country, where the creaking economy has long been seen as on the verge of collapse due to crippling international sanctions and massive mismanagement. AFP