Pattaya Daily News

02 September 2010 :: 12:09:35 pm 37336

Ministers & Policy Makers Meet over Thai Baht Appreciation

A current two-year high in the Thai baht, which yesterday traded at 31.1 to the U.S. greenback, has forced financial policy makers into a meeting regarding fiscal measures and reports speculating various negative impacts for Thai exporters Wednesday.
Advertise Here

Thailand, the 1st of September 2010: Thai Prime Minister Abhisit Vejjajiva, Finance Minister Korn Chatikavanij, Central bank Governor Tarisa Watanagase and several other ministers met on Wednesday to discuss the appreciation of the Thai baht and its effects on Thai export competitiveness and resultant economic growth targets.

Trading at a peak of 31.1 to the U.S. dollar yesterday, the Thai baht has gained more than 6% against the greenback in the year-to-date, one of the strongest performers in Asia behind the Japanese yen and Malaysian ringgit. In contrast, Vietnam’s dong has fallen over 5.5% against the U.S. dollar on the back of several currency devaluations aimed at boosting exports.

The increasing appreciation of the Thai baht, has forced business leaders and policy makers to question the bahts effect on continued competitiveness in the export market, to which Vietnam, Indonesia and Malaysia are all experiencing significant growth.

Addressing the issue, Ms Watanagase explained that evidence suggested that Thai exports are continuing to grow despite an appreciation of the baht against the dollar. She urged businesses influenced by currency exchange rates to hedge their interests while stating no intervention is necessary from the Central Bank providing the baht continues to move in line with other Asian markets.

“Right now, we rank second in terms of currency appreciation in the region,” she said yesterday. Even so, exports have risen by as much as 30%, even though the stronger baht means lower revenues in baht terms.”

Despite assurances, exports have already begun to slow in recent weeks, with July exports down over US$2 billion from Junes US$17.9 billion. Increasing competition from Vietnam, particularly in the agricultural sector may significantly affect Thailand’s competitiveness in the crucial market.

Surging 37% in a year-on-year comparison, exports have been the major driving factor behind Thailand’s growth for the first six months of 2010, sitting at 10.6% and speculated to reach 20% for the year. Thai Commerce Minister Porntiva Nakasai revealed growth expectations will be in jeopardy if the baht continues to appreciate, urging the Central Bank to adopt measures to stabilise the currency.

The private sector is becoming increasingly concerned by the bahts appreciation, with the Thai National Shippers’ Council (TNSC) voicing their concerns over Thailand’s ability to compete with various other countries in key, agriculture and manufacturing markets.

“Thai exporters are currently unable to compete with competitors in the region, including those from Indonesia and Malaysia … and not to mention the Vietnamese, who have benefited from several rounds of devaluations,” explained TNSC chairman Paiboon Polsuwanna.

At present, no planned intervention has been announced by the Central Bank, while the baht continues to strengthen in the face of stagnant U.S. and European markets. Some analysts predict an exchange of 30 baht to the greenback is imminent, while other Asian currencies see similar appreciation against the dollar, albeit not as significant.

Reporter : John Weston   Photo : Internet   Category : Business News

Comments in News


    
CAPTCHA Image
*

The messages you read here are opinions from the public and posted into the Forum automatically. The systems owner is not responsible for any content in the Forum or any comments posted. There is no proof that the contents posted are genuine or not, even if the name of the poster is real, th erefore, please use common sense when reading the Forum. If there are topics which are against the law or immoral, please contact webmaster@pattayadailynews.com

Greg

Bob

aussiebkk