Shippers warn baht too strong, hits exports and jobs

Thailand’s shippers have criticised the baht for strengthening and moving more sharply than economic fundamentals and regional competitors, warning the trend is harming exports, manufacturing and the country’s competitiveness.

Thanakorn Kasetsuwan, chairman of the Thai National Shippers’ Council (TNSC), said the baht’s strength and rapid volatility have become a major problem for manufacturers and for companies involved in exporting and importing. He called on agencies responsible for the currency to step up management of the baht’s exchange rate against major currencies—particularly the US dollar—arguing the exchange rate is a pillar supporting Thailand’s export performance and overall economy.

The TNSC views exchange-rate management—especially against major global currencies such as the US dollar—as a structural factor that directly affects national competitiveness, and as important as other core economic pillars.

In recent years, Thailand has faced a baht that strengthens faster than the regional average, a movement that does not reflect fundamentals alone, the council said. It has also been driven by short-term capital movements, financial transactions not aligned with real economic activity, and gaps in measures governing capital flows—factors that negatively affect exports, production, employment and long-term competitiveness.

The council said it sees clear signs of baht overvaluation, citing three main areas:

1) Stronger than regional rivals

The baht has strengthened more than key ASEAN competitors such as Vietnam, Indonesia and Malaysia, forcing Thai exporters to bear greater foreign-exchange risk while competitors gain a pricing advantage.

2) Hot money inflows

Short-term capital flows aimed at currency and financial-asset speculation do not create real investment or jobs in Thailand, but add pressure for the baht to strengthen rapidly and become more volatile.

3) Higher hedging costs

SMEs and mid-sized exporters have limited access to risk-management tools, and the cost of FX hedging has risen, turning it into an added burden instead of support.

The TNSC proposed raising exchange-rate policy to the level of a national economic pillar, and outlined four recommendations:

1) Set a policy goal to keep the baht competitive

The government and the Bank of Thailand should set a clear policy goal that the baht should not strengthen significantly beyond the average of regional competitors, and should treat the exchange rate as a strategic economic tool rather than merely a financial-market outcome.

2) Tighten oversight of non-real-economy capital flows

Authorities should distinguish between capital for trade and real investment and short-term speculative inflows. The council suggested macroprudential measures such as minimum holding periods, taxes or fees on certain inflows, and greater transparency for FX transactions not related to trade or investment—accepting value-creating capital while limiting flows that distort the system.

3) Align monetary and FX policy with the real economy

Interest-rate decisions and exchange-rate management should take into account production, exports and employment, and should not leave the real economy carrying the cost of financial stability alone.

4) Reduce FX risk costs for exporters

Authorities should lower hedging costs, especially for SMEs, by expanding low-cost hedging schemes, increasing the role of state agencies or specialised financial institutions in risk-sharing, and promoting local-currency settlement with trading partners.

“The state should communicate to the public that a stable and competitive baht is not market distortion—it is protection of the country’s production base, exports and employment,” the TNSC said, adding that it wants a more proactive approach rather than a reactive one.