Thailand: Baht at 9-month high worries exporters

Gains in the baht, Asia’s best performer in the past six months, are frustrating exporters and many businesses that say the strong currency is hurting them.

The private sector is concerned about the “rapid baht strength”, Thai Bankers’ Association president Payong Srivanich said in a briefing in Bangkok on Wednesday

The currency, which is on its longest winning streak in nearly six years, is hurting export competitiveness at a time when businesses are already struggling with rising costs from electricity to interest rates, Federation of Thai Industries chairman Kriengkrai Thiennukul said.

Exporters are finding it difficult to fix their selling prices with the currency’s faster-than-expected gain in the past month, said Suparp Suwanpimolkul, vice-chairman of the Thai National Shippers Council.

The baht has gained 13% against the US dollar since hitting a 16-year low above 38 to the dollar in October. The weighted interbank exchange rate quoted by the Bank of Thailand at the close of business on Tuesday was 33.491, a nine-month high.

Apart from dollar weakness that is shoring up many currencies, the baht is surging on expectations that the return of millions of Chinese tourists would swell the country’s coffers. For Mr Kriengkrai, China’s reopening would also mean more of its products coming into the Thai market.

“Thailand will face rising price competition and a strong currency won’t benefit Thailand,” he said.

Hot money flows into Thailand are also increasing. Since the start of the year, an estimated 60 billion baht worth of foreign inflows have gone into bonds due in less than one year, Mr Payong said.

The Bank of Thailand is closely monitoring the currency to ensure that movements are in line with the market, he said. 

“The central bank is taking care of the baht in line with the market mechanism,” he said. “We don’t want to see anything against the market mechanism.”