Changers may up spread again

Larger moneychangers will discuss widening their spread from 5 satang to 8-10 satang per US dollar to recover higher costs, protect themselves better against foreign-exchange volatility, and help small operators.

The spread was just increased from 3 satang to 5 satang six months ago after operators suffered losses from the baht’s appreciation, Chanaporn Poonsuphirun, president of the Thai Association of Foreign Exchange (Tafex), said yesterday.

The spread of small moneychangers currently ranges from 10 to 15 satang, depending on the pricing guidelines of large companies. If the spread of large moneychangers increases to 8-10 satang, theirs will expand to 20-25 satang and the profit margin will expand to 13-14 per cent from 10 per cent, she said.

Even though the baht has turned to depreciation, forex volatility and higher costs including rent and salaries have squeezed small players.

The entry-level salary has been raised to Bt15,000, so the salary scale for existing employees must be adjusted upwards. Human resources in the business are important because each operator has to spend three years training banknote counters.

The 15 larger operators control 30 per cent of the market.

The bright outlook for tourism will benefit the business. 

The market in the first five months grew by 10 per cent year on year to US$1.9 trillion (Bt61 trillion).

The yuan has become the second-most-exchanged currency after the US dollar thanks to the surge in Chinese visitors.

Competition among larger moneychangers is a factor in the lower spread as well as fixed costs, which rose to 40 per cent from 30 per cent.

Moneychangers have to manage inventory carefully because 80 per cent of their banknotes must be sold back to commercial banks at the end of every month under Bank of Thailand regulations. To prepare for the Asean Economic Community, waiving the 80-per-cent rule would help facilitate currency trading in border provinces. Singapore and Hong Kong do not have such a rule.

 

Tafex 

Tafex, which was set up a year ago, has tried to negotiate with the central bank about relaxing the rule as well as raising the limit on transactions from $5,000 to $20,000.

The association will go on a roadshow nationwide to educate small moneychangers, especially those in the South, which accounts for 30 per cent of the market. The region is a popular destination for foreign tourists and has the most forex licence holders outside Bangkok. 

However, small operators there are not licensed yet because they do not know the regulations. Unlicensed operators are at high risk of being investigated by the Anti-Money-Laundering Office.

Tafex is planning to ask the central bank to relax licensing requirements to help save costs for moneychangers because even if a company has a licence, its branches must also have licences of their own.

The association has about 63 members but 150 licences, she added.