Burma is facing its biggest economic crisis of recent years and has just two months foreign currency reserves left, local diplomats say. With inflation running at 20 per cent and rising sharply, the cost of many consumer goods is spiralling out of control.
Diplomats based in Rangoon say that recent fighting on the Thai-Burmese border, which hit exports badly, proved to be the catalyst for the financial freefall.
"We know that government officials have been going round to money-lenders in the capital trying to buy up dollars, so we suspect that they only have a few months of hard currency reserves left," said one.
In the past few weeks, the value of the Burmese currency has halved to around 800 kyat to the dollar. In some shops, labels have been removed from goods because prices are changing so rapidly.
In the past month there have even been whisperings of discontent from Burmese, who know that any form of dissent can lead to years of imprisonment.
Mr Mo Chu (33), a bus driver, says that even basic necessities are now beyond his reach.
"Everything has doubled in price since April," he said. "A sack of rice, a cup of tea, even clothes - it's all so expensive."
One month ago, a sack of rice cost 2,400 kyat. This month the same rice was selling in Rangoon for 4,000 kyat; while a cup of tea went up from 35 to 70 kyat in the same period. Bus fares and taxi prices have similarly increased.
The price of petrol on the black market has seen a 300 per cent rise.
Meanwhile, the country's ruling junta is thought to be propping up the economy by printing more money, a move that could further fuel inflation and add to Burma's economic difficulties.
Despite the economic problems Burma's second city of Mandalay and much of northern Burma is proving to be a magnet to entrepreneurial Chinese businessmen from across the border.
Happy to exploit the moribund Burmese market, which many Western companies have boycotted in protest at the unelected regime, they are providing cheaply made goods to a product-starved nation. In the city's Zeigyo market, the stalls are packed high with Chinese goods.
Prof Wiorasakdi Mahatdhanopol, from Bangkok's Chulalongkorn University, observed: "Despite Burma's economic problems, the Chinese know that the country is a huge market for their products.
"The Burmese people are poor and they can't afford to buy the materials needed to manufacture their own products or pay for things from neighbouring countries like Thailand.
"By selling their goods inside Burma at very low prices," Prof Mahatdhanopol said, "the Chinese are cleverly positioning themselves as the dominant force in their neighbour's economy."