Baht to stay strong in Q1: KBank

The baht should weaken by the end of first quarter as manufacturers import machinery and raw materials to resume production after the flood crisis, said KBank executive vice president Songpol Chevapanyaroj.
The amount of compensation claims payable to flood-damaged policyholders in Thailand is estimated at no less than Bt100 billion. Reinsurers will compensate physically damaged businesses first. The indemnity process for insurance compensation for business interruptions will take six months to a year.
Moreover, capital inflows from parent companies overseas transferring large amounts of money to help their subsidiaries in Thailand will strengthen the baht.
Global economic instability is also influencing the currency, but that factor is difficult to predict, so the bank will evaluate the baht again in the second half of 2012, he said.
The baht should stay at between 30-32 per dollar. To protect themselves from likely currency volatility, traders should reduce risk through letters of credit or opening accounts though export credit insurance, Songpol said.
He said KBank expected its export credit insurance in 2012 to increase to Bt35 billion from Bt30 billion this year.
“We also recommend that customers buy insurance covering business risks without waiting for reinsurers to cover flood risks. Customers can buy additional flood insurance when reinsurers are ready,” he said.
Meanwhile, KBank will launch more financial instruments to help customers reduce risks from currency volatility and products that help sustain clients’ business liquidity, Songpol said.
The bank has suggested that customers look for emerging markets and use other currencies to reduce risk, such as the yuan and yen.