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Jobless up, but baht strongest in 2 years

May 26. 2017
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THE UNEMPLOYMENT rate in the first quarter went up slightly to 1.2 per cent, from 0.97 per cent in fourth quarter of last year, but the baht reached its strongest value in almost two years yesterday.

Last year’s unemployment rate was 1 per cent. A total of 460,000 people were out of a job in the first quarter this year as private investment and exports have not yet fully recovered.

The total employment figure for the first quarter was 37.4 million, down 0.6 per cent year on year. Employment in the farm sector dropped 1.4 per cent and in the non-farm sector 0.3 per cent, since exports and private investment have not yet fully recovered, said Porametee Vimolsiri, secretary-general of the National Economic and Social Development Board (NESDB). 

However, he said employment would probably rise later as export growth is expected to continue, and employment in the farm sector in April rose 7 per cent. 

Average wages also dropped by 0.9 per cent in the quarter, in contrast with labour productivity, which increased 4 per cent.

In contrast to the bad news for the labour market, the baht appreciated to 34.04 per US dollar, the strongest in 22 months, during yesterday’s afternoon trading. This will not adversely affect exports because it is due to short-term market moves, Porametee said.

Thiti Tantikulanan, executive chairman of Kasikorn Securities, said the baht was attractive among foreign investors because of Thailand’s relatively high current-account surplus.

He said the baht, the Taiwan dollar and the South Korean won were the strongest among Asian currencies, largely driven by high current-account surpluses. 

Thailand current-account surplus was US$46.8 billion last year, equivalent to 11.5 per cent of gross domestic product. The NESDB projects that the current-account surplus this year will remain high at about $38.8 billion, equivalent to 8.9 per cent of GDP. 

The baht appreciated 0.8 per cent quarter on quarter in the first three months of this year. It averaged 35.11 per dollar in the first quarter and then appreciated to 34.45 in April because of depreciation of the dollar as investors became less worried about interest-rate increases by the US Federal Reserve.

The baht yesterday appreciated sharply, by 0.44 per cent, during afternoon trading. 

Reuters reported that the baht had appreciated by about 5 per cent year-to-date. The South Korean won has risen 7.91 per cent, the Taiwan dollar 7.18 per cent and the India rupee 5.12 per cent. 

Investors usually borrow US dollars at low cost and then invest in Thai government bonds, which deliver higher returns than US bonds. They also gain from baht appreciation. 

The baht has been approaching 34 per dollar and the central bank might try to keep it from crossing this psychological level, Thiti said. 

The current-account surplus in the first quarter remained high at $13.3 billion, according to the NESDB. Rising exports contributed to the surplus. Export value grew by 6.6 per cent in the quarter, the highest rate in the last 17 quarters. Receipts from tourism also played a part in the surplus. Exports also grew by 8.5 per cent in April. 

The Bank of Thailand has been closely watching the currency market in order to make sure that the baht does not strengthen too much compared with Asian currencies, as it wants to make the baht stable and lessen the foreign-exchange impact on exports. 


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