‘Stronger baht won’t hurt Thai exports as demand boosted by global recovery’
THE BAHT’S appreciation against the US dollar will not put pressure on Thailand’s 2017 export target as the Thai currency is moving in tandem with its regional peers, experts say.
Kobsak Pootrakool, a vice PM’s Office minister, said that since Thai exports are being driven by the global economic recovery, the baht’s climb will not peril the country’s export growth target of 5 per cent for this year.
Porametee Vimolsirim, secretary-general of the National Economic and Social Development Board, said the baht’s strengthening has made only small impacts on Thai exporters, as their major destinations have bounced back on the resurgent global economy.
In the past two months, the Commerce Ministry’s outbound shipment figures have improved sharply and last month was more than US$20 billion, he said.
The currency’s impact on exports was regarded as less important than the global recession and sluggish exports. The drop in Thailand’s rubber prices since the beginning of this year could also affect Thai exports, but the prices of this year’s agricultural products have been higher than during the years of drought.
“The recovery of the Thai economy has been scattered among several sectors. When exports, which is a sector of the national economy, is recovering, we expect it to support private investment,” he said.
An exchange rate of Bt35.5 per US dollar or lower is a proper level for importers to mitigate their risks, possibly by ordering more goods or machinery to lock in the lower costs of imports as a result of the appreciating baht, Kobsak said.
From the beginning of this year, almost all Asian currencies including the baht have gained 5 to 6 per cent following the weakening of the greenback.
However, the improved employment picture and decline in welfare requests by the unemployed in the United States may represent a state of the recovery that could trigger the Federal Reserve’s decision to hike the US interest rate once or twice this year.
“When the US economy improves, what the Fed will do next is reduce its balance sheet and gradually raise the rate to the expected level of 1.25 to 1.50 per cent,” he said.
If the move comes as expected, foreign capital may flee to the US, which could lead to its currency’s appreciation and the weakening of other currencies including the baht, he said.
As for any upward adjustments to the Thai policy rate, the Bank of Thailand’s Monetary Policy Committee may take the domestic economy into consideration rather than external factors, he added.
