FRIDAY, March 29, 2024
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Exporters to meet BOT chief to voice concerns over baht's appreciation

Exporters to meet BOT chief to voice concerns over baht's appreciation

Executives of the Thai National Shippers’ Council (TNSC) will on Tuesday hold a press conference to present their assessment of the impact of the strengthening baht on the country’s exports this year, Visit Limluecha, vice-chairman of the TNSC, a club of Thai exporters, said.

The assessment will take into account the adverse impact of the baht appreciating to between Bt29-Bt31 to the dollar. The private sector is concerned about the baht appreciatimg to Bt29 in the beginning of this year, he said.
“We previously expected that the baht would not appreciate further, because it could erode our competitiveness and cause us to loose export markets to our competitors,” he said.
The baht has been the strongest currency in Asia and it ranks fourth among the strongest global currencies, he said.
Over the past two years of the strengthening baht, Thai exporters have lost about 17 per cent of total export value, he said.
Some businesses have suffered losses from the unfavourable exchange rate and many struggle to make profits, he said, adding that manufacturers could not increase production because of drop in orders, according to Visit. 
The government recently set up a committee to look into the issue of the baht's appreciation. However, they could not implement any effective measures as power was in the hands of the central bank, he complained. The Bank of Thailand (BOT), however, said earlier that the baht had moved beyond the Bt30 level during the New Year holidays because of the thin market and it retreated when the market returned to normal on January 2.
Exporters will meet with central bank governor Veerathai Santipraphob on Friday (January 10) to discus about the issue of the baht's appreciation, he said.
The private sector would like the baht to stay around Bt31 to the dollar, or stay close to the value of competitors' currencies, he said.
“We’re concerned very much that the baht may appreciate further and surpass the Bt29 level, that would severely hurt Thai exports and the country’s competitiveness.”
Meanwhile, Siam Commercial Bank’s Economic Intelligence Centre (EIC) forecast that the baht would appreciate to 29.5-30.5 by the end of this year.
The EIC believed that there were many factors behind the baht's appreciation this year. However, the pace of strengthening may not be as fast as last year’s, said the EIC.
The baht averaged 31.05 per dollar last year, or up 4.1 per cent from 2018.
The baht’s Nominal Effective Exchange Rate was 123.2 last year, or up 6.6 per cent from 2018.
The research centre expected Thailand to continue to have a high current account surplus this year, about 6 per cent of GDP, compared with 6.3 per cent of GDP last year. Factors driving the current account surplus include flat exports and imports, expansion of tourism, and weak investment. Combined with high international reserves, the baht has been a regional safe haven currency and demand is high among investors.
The impact of the US-China trade deal would lead to funds inflows into emerging markets including Thailand. The dollar is expected to weaken during the global recovery then it would indirectly boost the baht value relatively. However, the weakness of the dollar is not much as the US Federal Reserve would keep its policy rate unchanged this year, while the European Central Bank and the Bank of Japan are expected to further ease their monetary policies leading to a relatively weaker euro and yen.
The BOT has limited tools to deal with the baht appreciation because it cannot cut the policy rate any further as it is already at a historic low at 1.25 per cent. Moreover the BOT could not intervene much in the exchange rate market because it fears that the United States may accuse Thailand of being a currency manipulator.
The Chinese yuan is on a rising trend after the US and China reached an agreement on the first trade deal. This will pull the Thai baht up too, said the EIC.
However, there are factors that could limit the pace of the baht's strengthening. Thai corporates are likely to invest more abroad due to slower economic growth in the country. Thai investors are also encouraged to invest more in foreign financial assets. As risk of the global economy reduces, it may cause gold prices to reduce or not increase much this year, which will lessen pressure on the baht, compared with last year when gold price rose high. Thai investors sold gold for profit and exchanged for the baht, the EIC said.
“The conclusion is that the baht is strengthening and would continue the trend this year, but the pace of the appreciation may be smaller than last year’s,” the EIC added.

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