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Thailand: Strong baht sparks fears
The private sector has voiced concerns about the stronger baht, which recently hit a 31-month high, saying it could hurt exports and tourism as well as the overall Thai economy.
Some businesses have demanded new measures from the Bank of Thailand to curb the baht’s rise.
The Thai National Shippers’ Council (TNSC) estimates that the stronger baht could cut export revenue by as much as 345 billion baht for 2017.
Kalin Sarasin, chairman of the Thai Chamber of Commerce and the Thai Board of Trade, said the baht is rising too fast and it will have a negative impact on exports, making shipments miss the chamber and government target of 6-8% this year.
He said the Bank of Thailand should issue measures to help curb the rise of the baht before it starts eroding exports, which account for more than 60% of the country’s GDP.
Mr Kalin said a stronger baht would also have a negative impact on tourism, another major facet of GDP, saying a healthy baht makes travelling in Thailand more expensive.
“The Joint Standing Committee on Commerce, Industry and Banking [JSCCIB] is very concerned about the baht, which continues to rise too fast and will definitely affect exports and tourism, as well as the whole Thai economy,” Mr Kalin said.
The baht has risen 9.9% this year to 32.50 baht per US dollar, hitting a 31-month high.
Mr Kalin said the JSCCIB predicts exports this year to grow 6.5-7.0%, up from a previous forecast of 3.7-4.0%.
The Commerce Ministry forecasts export growth approaching 10% this year.
Exports totalled US$20.1 billion (658 billion baht) in October, up 13.1% year-on-year, while the 10-month figure reached 95.5 billion, up 9.7% year-on-year, according to the Commerce Ministry’s data.
But the private sector and the Commerce Ministry believe that while exports will continue growing next year, such growth could be muted by the high-base effect, Mr Kalin said.
He said the JSCCIB estimates that exports could grow 6% next year, matching the initial forecast of the Commerce Ministry of 5-6%.
Commerce Minister Sontirat Sontijirawong said the ministry will evaluate the situation with commercial diplomats and the private sector before setting next year’s official export target by early 2018.
TNSC chairwoman Ghanyapad Tantipipatpong said the council has forecast 2017 exports to grow by 8.5-9.0% due to increasing demand for Thai products in major markets at a time when the global economy is recovering.
She said the growth of 8.5-9.0% measures export value in terms of US dollars. But in terms of the baht, Thailand could gain only 4%, as the stronger currency makes prices of goods and products cheaper once they are converted back into the local tender.
To offset a drop in export value, Thai exporters will be forced to offer goods at higher prices in dollar terms, making those products less competitive and potentially hurting exports, especially if the baht’s rise persists.
“The TNSC hopes that the Bank of Thailand will step in and do something to help curb the baht from strengthening further against other currencies in the region, denting Thai exports,” Ms Ghanyapad said.
Source: https://www.bangkokpost.com/business/news/1373675/strong-baht-sparks-fears