Good time to import: Kittiratt

He urged Thai businesses to take advantage of the weakening US dollar by importing new machinery and technology.
“The baht has appreciated slightly against the US dollar while other regional currencies and currencies of trade partners have increased at greater pace, so in fact the baht is relatively weaker against other currencies,” Kittiratt said.
“Therefore Thailand is still able to compete in export markets and the central bank is believed to be able to manage the currency appropriately,” he said, referring to the fear of huge capital inflows that might make baht rise sharply and make Thai exports less competitive in the global market.
Central bank Governor Prasarn Trairatvorakul yesterday briefed the Council of Economic Ministers about the latest developments in the global and local economies after the Fed’s move last week. It injected money into the US economy by promising to continue to buy long-term bonds unless employment improves and to maintain its policy of ultra-low interest rates policy until mid-2015.
Kittiratt said Thailand was ready to run a current-account deficit (trade in goods and services) and private firms should import more new machinery and technology to improve their productivity.
He said years of current-account surplus had led to a rise of the baht against the dollar. Regarding bleak export prospects, he said Prime Minister Yingluck Shinawatra had urged the Commerce Ministry to complete a plan of action, after which the Finance Ministry would come up with measures to support the export sector affected by the global slump.
Ministers have not yet discussed the impact of the dispute between China and Japan over disputed islands, but if the situation escalates the Thai government will come up with measures to cushion any effects on this country, Kittiratt said.
“As a third party we cannot express our views on such a politically sensitive issue, but we are closely monitoring the situation. Since the two countries are economic leaders regionally and globally, eventually they will negotiate” to settle the dispute, said Kittiratt, who is also a deputy prime minister.
Usara Wilaipich, senior economist at Standard Chartered Bank (Thailand), said Thai investors had sold gold to take profits from a recent rally in the price of the precious metal.
“As these investors sold gold in exchange for baht, it has put more pressure on the currency to rise, so in the short term, the currency is under high pressure,” Usara said.
The baht’s psychological test level is 30.50 per dollar, she said. However, in the next six months the baht could be weaker if more bad news emerges. Investors are still worried about the euro crisis and the possibility of many countries being downgraded by international rating agencies.
Investors are also waiting to see how bank stress tests will come out. Many European banks may fail the tests. Moreover, the rate of non-performing loans, already high in that region, could rise even further, she added.