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The purpose of this study is to evaluate the use of a parallel market mechanism in forecasting the exchange rate of Myanmar Kyat (MMK) after the 2021 Myanmar coup. This paper seeks to answer how an official fixed exchange rate is influenced by a parallel market rate during the military coup. This study demonstrates both the benefit of understanding the impact of a market mechanism and the unique value of leveraging deep learning (DL).

This study applies DL for the first time to forecast the daily official exchange rates and parallel exchange rates, covering the period January 5, 2021–August 22, 2022. This study shows the insights available from forecasting the market exchange rate of MMK in parallel markets that are sensitive to political changes for Myanmar.

After the February 2021 military coup in Myanmar, the subsequent use of an untrusted exchange rate system in Myanmar resulted in a sharp gap between the official and the parallel exchange rates. The study shows that the actual forecasting of exchange rates is primarily a reflection of an active market mechanism rather than official exchange rates set by the monetary authorities.

No previous study has forecast the exchange rate of Myanmar since the latest Myanmar coup in 2021. This study contributes crucial predictions, provides a robust technique “deep learning”.

This study aims to convey the understanding of the ecosystem – how “hundi” works on the border trade between Myanmar and northern Thailand, which is an informal transfer system and is widely used as an alternative banking system. Even though the role of hundi is unable to declare the sources of money under the standard settlement of formal banking system, a failure to operate of its official mechanism are carrying using hundi, as a financial platform across the border between Thailand and Myanmar. This study surveys the best practice mechanism for the regional and international cooperation.

This paper draws on relevant literature, open-source reporting, and interviews with more than 30 interviewees on the border between Thailand and Myanmar. Interviewees includes border-trader, money changer, money transfer operators, business leaders, hundi operators, immigrant labors, government officials and commercial banking staffs.

This study provides a unique insight of hundi system, which work as the alternative mode of formal banking. It is an informal fund transfer payment platform used on the border between Thailand and Myanmar in the past five decades. It insists that hundi plays a significant role in both substitution and complementary on the trade and payment across the border of Myanmar–Thailand. Even though confronting with the barriers of financing of terrorism (anti money laundering AML/combating the financing of terrorism CFT) risk, the competition with the expanding and modernizing formal banking sector, and the introduction of Fintech and mobile money services. In the short term, these are unlikely to eliminate the hundi system completely, but may instead push hundi operators towards adopting these networks and technologies in their own operations.

This paper will be a useful source for academics, development professionals, policymakers, law enforcement agencies and business actors who are seeking to understand Myanmar’s informal payment system, hundi.

This is the latest work for border trade payment or trade financing role of hundi which has hidden under the informal market of the border for several decades. It has few research of hundi on border trade and payment, particularly after the military coup in 2021 which made hundi return to be on the spotlight and simultaneous mechanism of border trade and payment ecosystem of Myanmar. This paper will be a useful source for academics, development professionals, policymakers, law enforcement agencies and business actors who are eager to understand Myanmar’s informal payment system, hundi, especially during the hardship.

Political risk factors play a pivotal role in determining the bilateral trade flow of Asian countries in general and the Association for Southeast Asian Nations (ASEAN) countries in particular. The main purpose of this research paper is to examine the impact of disaggregated political risk in lowering the bilateral trade flow of Thailand, a prominent member of ASEAN, vis-à-vis her 132 trading partners.

Using panel data of Thailand with her partner countries for the period 1984–2015, this paper uses four different panel specifications named pooled ordinary least squares and random effects estimations (estimated generalized least squares estimation) of three types by controlling for cross-sectional heteroscedasticity, time-wise heteroscedasticity and contemporaneous correlation.

Holding other gravity-based determinants constant, for one unit increase in the ranking of indicator of military in politics at home and abroad, trade flow decreases by 5–9% of the total trade flow of Thailand per year. For other types of political risks like government instability at home and abroad, difficulties in investment profile at home and abroad and internal and external conflict at home and abroad, the decrease is also substantial and most statistically significant. The magnitude of loss due to the military channel at home and abroad can amount to US$9.38–US$16.88 bn per year for Thailand, after controlling for other gravity variables.

The reasons for risk originating from different political channels could be explored at the regional or global level to understand their global and local dimensions.

Policymakers should attempt to resolve the political risks at home and abroad in an amicable manner, through dialogue, so that bilateral trade flow is not inhibited.

By taking economic reforms only, the trading problem cannot be resolved until and unless Thailand involves her society, politics and administrative mechanisms in a conducive manner to facilitate her trade. A dialogue among bureaucracy, political authority and military is beneficial in mitigating political risks.

The paper is unique in the sense that it makes a solid attempt to identify the potential channels of disaggregated political risk in affecting trade flow negatively, in a gravity framework, by controlling for different kinds of error structure.