Economic stagnation, and dashed hopes of political reform, have sent Burma's currency to an all-time low, black market traders have said.

Burma's kyat, while officially pegged at a rate of 6.90 to $1, has slipped to a street rate of 1,060 to $1, currency changers said.

Last week the rate was 1,010 kyat per dollar, and two weeks ago 950.

The kyat had set a previous low of 1,000 to $1 in April, before surging 25% on the release of pro-democracy campaigner Aung San Suu Kyi after 19 months of house arrest.

The release raised hopes of political change in the military-ruled country, and of an end to years of economic sanctions imposed by the US and Europe on Burma in protest at the country's governance.

Ms Suu Kyi's National League for Democracy, which won 1990 elections, has never been allowed to govern.

Dollar demand

But Burma's ruling generals have failed to hold talks with Ms Suu Kyi, almost four months after releasing her.

And reform hopes were further dashed with the arrest of a group of pro-democracy activists.

The reopening of checkpoints on the Thai border, after a three month closure, has also weakened the kyat by boosting demand for dollars for use in trading.

Demand for foreign products has risen with a shortage of staples such as cooking oil and rice blamed, by authorities, on unscrupulous traders.

"The truth is that the bulk of the rice is being bought up by unscrupulous speculators who are hoarding [it] and manipulating the prices," an official said.

"We need to search them out and punish them effectively."

And with Burma's economy long seen on the verge of collapse, observers saw little chance of a recovery in the kyat.

"Worse is yet to come," one market watcher said.