All eyes on baht amid capital inflows

 The baht opened at 31.56 per US dollar yesterday morning and appreciated during the day to 31.37, a 50-month high since October 2013, a source at Bank of Ayudhya said. About Bt6-Bt7 billion in capital moved into the bond market yesterday.
Since the start of the year, about Bt90 billion has washed into the bond market, with Bt42 billion in long-term securities and the remainder in short-term bonds.
 In January 2017, some Bt34 billion moved into the bond market.
The baht has been rising amid high volatility and exporters could be affected. “However, if the currency appreciates sharply, there could be either market corrections or rebounds. 
We suggest business operators should trade in third currencies or in local currencies,” the Bank of Ayudhya source said.
 The ringgit has been the strongest gainer, at 3.99 per cent, followed by the baht with 3.67 per cent, the yen 3.35 per cent, the yuan 2.72 per cent, the Taiwan dollar 2.55 per cent and the Singapore dollar 2.24 per cent.
 The greenback has been pressured on several factors, ranging from a surge in the euro to its highest in three years and worries about a possible trade war after US President Donald Trump signed into law steep tariffs on imported solar panels and large washing machines to comments from US Treasury Secretary Steve Mnuchin on Wednesday that a weaker dollar was good for trade.
 The US tariffs on solar panels and washing machines are among the first unilateral trade restrictions imposed by the US administration as a part of a broader protectionist agenda to help US manufacturers. They have raised concerns over the prospects for Asian manufacturers, which produce goods at lower costs.
Kirida Bhaopichitr, research director for international research and advisory service at the Thailand Development Research Institute, said the baht is forecast to continue appreciating in the short term, backed by the country’s estimated export growth of about 7-8 per cent this year and likely gains in tourism revenue. Such trends could help put the country’s current account into a surplus.
Wisit Limluecha, vice chairman of the Thai National Shippers’ Council (TNSC), is concerned by the risks from an appreciating baht and the prospect of more market protection measures against Thai exports. The TNSC had targeted export growth of 5.5 per cent this year.
 TNSC expects the baht to continue its appreciation for one more month and that this would make it harder for operators to plan, Wisit said.
“The baht’s appreciation has been among the strongest in the Asean region, reflecting the fact that Thai commodity prices are more expensive in relation to Thailand’s competitors,” he said.
 Commerce Minister Sontirat Sontijirawong said that he had asked related agencies to monitor the global trade issues that have affected Thai exports and the appreciating baht. The strengthening baht is an uncontrollable factor as a result of the weakening US dollar, he said.
Given the impact from the appreciating baht on Thai agricultural products, discussions must be held with stakeholders, Sontirat said. Measures have to be prepared to also cope with possible changes in US policies, he said.
 Sontirat said that talks would be held today with representatives of the private sector, including exporters in all industries, to help assess the overall picture for exports amid the impact from the strengthening baht.