BANGKOK, June 23 (TNA)
Current strengthening of the Thai currency, the baht, has hurt the country’s export-related industries
as well as the gross domestic product (GDP), a ranking industry ministry official said.
Nattapol Nattasomboon, deputy director-general of Industrial Economics Office,
quoted a study conducted recently by his office which cited that if the baht strengthened by another 10 per cent,
the country’s GDP would lower to 3.09 per cent from 4 per cent projected earlier.
And every volatility of the baht at one per cent will hurt national GDP by approximately 0.1 per cent
and the industrial GDP at 0.09 per cent, said Mr. Nattapol.
Other sectors which will be impacted include declines in public consumption to 1.87 from 2.36 per cent,
private investment to 0.13 from 0.59 per cent and exports to 8.49 from 13.23 per cent, he said.
On the other hand, imports will rise to 9.34 from 7.28 per cent.
But GDP could jump marginally to 3.26 per cent from an assumption that it would retreat to 3.09 per cent
if labour and capital productivity rose which could cushion the impact from the strong baht, he said.
Since the beginning of 2006 up till now, the baht has appreciated more than 15 per cent against the US dollar,
causing Thai manufacturing industries which have to depend on exports to have been impacted significantly.
Thai industries which have been affected most are food, textile and furniture.
By late Friday, the baht moved at around Bt34.58-34.61 against the dollar on the onshore market compared to Bt34.59-34.62 on Thursday.
Thailand's free-falling economy
Baht at strongest level since 1997
The Thai baht has appreciated to 34.38-to-34.39 to the US dollar, its strongest level in a decade, as foreign funds continue to flow into the Stock Exchange of Thailand, according to a Thai money dealer.
A dealer from Kasikornbank Plc said the baht had risen to highest point since the currency was floated exactly 10 years ago.
He said this was mostly because Asian currencies had strengthened thanks to an inflow of large foreign capital into Asian stock markets including the SET, whose index has surged to a four-year record high of over 800 points.
However, the rise in the baht by 4.5 per cent since early this year remained close to that of other Asian currencies.
For instance, the Malaysian ringgit had appreciated by around 4 per cent, the Indonesian rupiah by 3 per cent, and the Philippine peso by 8 per cent.
On Monday (July 1), the peso broke through the 9,000 level, a new high, before dropping to stabilise at 8,980 to the US dollar.
The dealer said the strengthening of the baht is not cause for too much concern because the currency has been moved by market mechanism, driven by the foreign capital inflows.
Should foreign funds continue to flow into the country, the baht is likely to further appreciate. (TNA)
Quote:
Bangkok Post 3rd July. They tend to shoot themselves in the foot sometimes. If the Peso is at the rate quoted then there will be a lot of rich bars girls over there!
The Thai baht has appreciated to 34.38-to-34.39 to the US dollar, its strongest level in a decade, as foreign funds continue to flow into the Stock Exchange of Thailand, according to a Thai money dealer.
A dealer from Kasikornbank Plc said the baht had risen to highest point since the currency was floated exactly 10 years ago.
He said this was mostly because Asian currencies had strengthened thanks to an inflow of large foreign capital into Asian stock markets including the SET, whose index has surged to a four-year record high of over 800 points.
However, the rise in the baht by 4.5 per cent since early this year remained close to that of other Asian currencies.
For instance, the Malaysian ringgit had appreciated by around 4 per cent, the Indonesian rupiah by 3 per cent, and the Philippine peso by 8 per cent.
On Monday (July 1), the peso broke through the 9,000 level, a new high, before dropping to stabilise at 8,980 to the US dollar.
The dealer said the strengthening of the baht is not cause for too much concern because the currency has been moved by market mechanism, driven by the foreign capital inflows.
Should foreign funds continue to flow into the country, the baht is likely to further appreciate. (TNA)
Quote:
Bangkok Post 3rd July. They tend to shoot themselves in the foot sometimes. If the Peso is at the rate quoted then there will be a lot of rich bars girls over there!
May you be in heaven half an hour before the devil know`s you`re dead!
BANGKOK (Thomson Financial) - Japanese companies in Thailand are beginning to reduce their investments in the kingdom due to the strong baht and negative perceptions about the investment climate, a survey said Wednesday.
Japan is Thailand's biggest foreign investor, but a survey of the 351 members of the Japanese Chamber of Commerce found that business sentiment in Thailand is 'deteriorating' for the first time since 1998.
Japanese businesses saying their investments in Thailand would decrease, outnumbered those planning to increase capital spending here, according to the survey conducted by the Japan External Trade Organization (Jetro)
The value of planned Japanese investments in Thailand this year has already fallen 11 percent from 2006, the survey said.
'It was the first time in nine years that we found those results, with sentiment deteriorating continuously,' Jetro Bangkok president Yoichi Kato told reporters.
'We found the willingness to invest declined compared to a year before,' he added.
The twice-yearly survey, conducted from April 27 to May 23, found the appreciation of the baht was the top concern for Japanese companies in Thailand, followed by political instability, economic policies and rising labor costs.
'Japanese firms view that the exchange rate of 37.25 baht to the dollar is a profitable rate. But the current market rate of 34.49 baht makes them lose 7.4 percent in profits,' Kato said.
Kiyoharu Yukiyoshi, executive director of JCC Bangkok, said Japanese firms have adopted a wait-and-see stance before making new investments in Thailand.
'We will probably wait until the election before making a decision whether to raise investments in Thailand. Hopefully, Thailand will have the election in November as the prime minister promised,' Yukiyoshi told Agence France-Presse.
'Baht appreciation is our major concern at the moment. There will be a bigger opportunity for us to move to Vietnam if the baht gets stronger,' he added.
Strong economic data released over the last week has helped push the Thai stock market to a 10-year high, but foreign inflows to the market have sent the baht even higher. The Thai unit was trading at 34.20-21 to the greenback at midday Wednesday.
Japan is Thailand's biggest foreign investor, but a survey of the 351 members of the Japanese Chamber of Commerce found that business sentiment in Thailand is 'deteriorating' for the first time since 1998.
Japanese businesses saying their investments in Thailand would decrease, outnumbered those planning to increase capital spending here, according to the survey conducted by the Japan External Trade Organization (Jetro)
The value of planned Japanese investments in Thailand this year has already fallen 11 percent from 2006, the survey said.
'It was the first time in nine years that we found those results, with sentiment deteriorating continuously,' Jetro Bangkok president Yoichi Kato told reporters.
'We found the willingness to invest declined compared to a year before,' he added.
The twice-yearly survey, conducted from April 27 to May 23, found the appreciation of the baht was the top concern for Japanese companies in Thailand, followed by political instability, economic policies and rising labor costs.
'Japanese firms view that the exchange rate of 37.25 baht to the dollar is a profitable rate. But the current market rate of 34.49 baht makes them lose 7.4 percent in profits,' Kato said.
Kiyoharu Yukiyoshi, executive director of JCC Bangkok, said Japanese firms have adopted a wait-and-see stance before making new investments in Thailand.
'We will probably wait until the election before making a decision whether to raise investments in Thailand. Hopefully, Thailand will have the election in November as the prime minister promised,' Yukiyoshi told Agence France-Presse.
'Baht appreciation is our major concern at the moment. There will be a bigger opportunity for us to move to Vietnam if the baht gets stronger,' he added.
Strong economic data released over the last week has helped push the Thai stock market to a 10-year high, but foreign inflows to the market have sent the baht even higher. The Thai unit was trading at 34.20-21 to the greenback at midday Wednesday.
Baht 'may hit 30 to $'
By Anoma Srisukkasem and Chalida Ekvitthayavechnukul
Thai currency, baht, may appreciate to 30 vis-a-vis the US dollar if the central bank, Bank of Thailand (BOT), allows it to float freely in the market, a currency expert said.
Adisak Kammoon, vice president of KGI Securities (Thailand), said the movement of the baht would have to be closely monitored.
"The Bank of Thailand still doesn't let the baht move freely according to market forces, which is considered dangerous because it may quietly lead to another financial crisis," he said. "Thus, as long as the Bank of Thailand is not confident that the exporters will be able to compete on their own, it is unlikely that the 30 per cent capital control will be revoked. There is a possibility that there may be additional measures to prevent the baht from rising further. If the baht is allowed to move according to the market, the level of the baht should be 30 baht."
His comments came after the baht turned stronger to a fresh 10-year high at 34.19-34.21 per dollar yesterday (July 4) compared to Tuesday's closing value of 34.33, mainly due to inflow of capital in the stock market.
The Thai stock market has rallied for three days in a row, boosting the SET index by more than 20 per cent. The baht also appreciated by 0.51 per cent against the euro from Tuesday and 0.36 per cent from last month. The baht against Japanese yen was up 0.45 per cent from Tuesday and 0.15 per cent from last month.
The baht has turned dramatically stronger against major currencies. It opened yesterday at 34.20 to the greenback, up 0.47 per cent from Tuesday and 0.96 per cent from the end of June.
A trader said the baht rose further after it broke the 34.50 barrier. "Some Thai exporters sold dollars in big lots yesterday," said the trader, who asked not be named.
The Customs Department said it has so far lost 3 billion baht (US$95.1 million) in revenue due to the appreciation of domestic currency coupled with the country's obligation to follow the Asean Free Trade Agreement (Afta).
Customs Department director-general Chavalit Sethameteekul said yesterday the stronger baht and lower income from Afta will cost the department around 3 billion baht ($95.1 million) in lost revenue.
He said in the third quarter the department expected to collect around 20 billion baht ($634 million) in revenue or around 7 billion baht ($221.9 million) per month. The department is likely to collect around 88 billion baht ($2.78 billion) in tax revenue for 2007 fiscal year, while revenue in the next fiscal year is forecast at a slightly lower figure of 87 billion ($2.75 billion). The department's income will fall next year mainly due to further tariff cuts following Afta obligations.
Meanwhile, the private sector has called on the BOT to find measures to curb the baht's appreciation after it was quoted yesterday at 34.17 baht per dollar.
The Federation of Thai Industries (FTI) will meet the central bank in a week or two if the baht keeps getting stronger, its chairman Santi Vilassakdanont said. He said the appreciation was caused by the flow of capital into Thailand's stock market and the influx of dollars from exporters.
He said the BOT has to consider whether the stronger baht was in line with other countries in the region.
Santi said the Thai currency market was more vulnerable to flows of foreign capital compared to other countries such as China, Japan and Vietnam due to the country's fewer regulations.
Although the total value of exports in the first half grew around 16 per cent, this does not mean that exporters will enjoy that growth, he said. On the contrary, they had to boost their exports in order to keep their customer base, while they could not earn any profit.
Nonetheless, Santi believes the country's export value will grow by 12.5 per cent--the same as the Commerce Ministry's target at the beginning of this year.
Boonkij Jitngamplang, chairman of FTI's Gem and Jewellery Industry Club, said operators in this industry were seriously affected by the stronger baht.
"If the BOT is unable to stabilise the baht, we will see a number of gem and jewellery operators close down their business this year," he said.
However, the central bank sees no need to intervene.
BOT deputy governor Atchana Waiquamdee said so far the baht has appreciated by four per cent from the beginning of this year but the central bank does not need to step into the market to halt the baht's movement.
"It is normal that the baht is stronger when there is demand for baht but we do not need to take care of it specifically," she said.
She conceded that the withholding reserve requirement could not prevent the appreciation of the baht as the measure did not cover portfolio investments by non-residents.
BOT governor Tarisa Watanagase said a large amount of capital has flowed into the country over the past few days but the baht movement remained in line with regional currencies. The baht rose by 5 per cent from the beginning of the year, compared to the Philippines peso at 6.7 per cent and the Indian rupee at 8.9 per cent.
The foreign funds flocking to the Thai bourse reflected the Kingdom's sound economic fundamental factors with a low P/E ratio.
Tarisa said despite the amount of foreign inflows into portfolios earlier, the baht had been stable due to demand for dollars from importers. The appreciating baht, however, does not translate into an absolute disadvantage for Thailand as it also indicated an increase in the Kingdom's purchasing power for imported goods.
She said the BOT would intervene in the foreign exchange market whenever the baht swung too much, just like in December last year when it appreciated by one per cent a week.
The BOT has encouraged institutional investors to invest abroad in order to increase investment choice and reduce pressure on the strong baht. However, they have exercised their rights to only 27 per cent of the approved ceiling. Last year, such investments increased sevenfold compared with 2005.
Deputy Prime Minister and Industry Minister Kosit Panpiemras attributed the rise of the baht to the fact that the business sector has began to become convinced that the Thai economy will be resolved for the better.
http://www.asianewsnet.net/biz.php?aid=10795
By Anoma Srisukkasem and Chalida Ekvitthayavechnukul
Thai currency, baht, may appreciate to 30 vis-a-vis the US dollar if the central bank, Bank of Thailand (BOT), allows it to float freely in the market, a currency expert said.
Adisak Kammoon, vice president of KGI Securities (Thailand), said the movement of the baht would have to be closely monitored.
"The Bank of Thailand still doesn't let the baht move freely according to market forces, which is considered dangerous because it may quietly lead to another financial crisis," he said. "Thus, as long as the Bank of Thailand is not confident that the exporters will be able to compete on their own, it is unlikely that the 30 per cent capital control will be revoked. There is a possibility that there may be additional measures to prevent the baht from rising further. If the baht is allowed to move according to the market, the level of the baht should be 30 baht."
His comments came after the baht turned stronger to a fresh 10-year high at 34.19-34.21 per dollar yesterday (July 4) compared to Tuesday's closing value of 34.33, mainly due to inflow of capital in the stock market.
The Thai stock market has rallied for three days in a row, boosting the SET index by more than 20 per cent. The baht also appreciated by 0.51 per cent against the euro from Tuesday and 0.36 per cent from last month. The baht against Japanese yen was up 0.45 per cent from Tuesday and 0.15 per cent from last month.
The baht has turned dramatically stronger against major currencies. It opened yesterday at 34.20 to the greenback, up 0.47 per cent from Tuesday and 0.96 per cent from the end of June.
A trader said the baht rose further after it broke the 34.50 barrier. "Some Thai exporters sold dollars in big lots yesterday," said the trader, who asked not be named.
The Customs Department said it has so far lost 3 billion baht (US$95.1 million) in revenue due to the appreciation of domestic currency coupled with the country's obligation to follow the Asean Free Trade Agreement (Afta).
Customs Department director-general Chavalit Sethameteekul said yesterday the stronger baht and lower income from Afta will cost the department around 3 billion baht ($95.1 million) in lost revenue.
He said in the third quarter the department expected to collect around 20 billion baht ($634 million) in revenue or around 7 billion baht ($221.9 million) per month. The department is likely to collect around 88 billion baht ($2.78 billion) in tax revenue for 2007 fiscal year, while revenue in the next fiscal year is forecast at a slightly lower figure of 87 billion ($2.75 billion). The department's income will fall next year mainly due to further tariff cuts following Afta obligations.
Meanwhile, the private sector has called on the BOT to find measures to curb the baht's appreciation after it was quoted yesterday at 34.17 baht per dollar.
The Federation of Thai Industries (FTI) will meet the central bank in a week or two if the baht keeps getting stronger, its chairman Santi Vilassakdanont said. He said the appreciation was caused by the flow of capital into Thailand's stock market and the influx of dollars from exporters.
He said the BOT has to consider whether the stronger baht was in line with other countries in the region.
Santi said the Thai currency market was more vulnerable to flows of foreign capital compared to other countries such as China, Japan and Vietnam due to the country's fewer regulations.
Although the total value of exports in the first half grew around 16 per cent, this does not mean that exporters will enjoy that growth, he said. On the contrary, they had to boost their exports in order to keep their customer base, while they could not earn any profit.
Nonetheless, Santi believes the country's export value will grow by 12.5 per cent--the same as the Commerce Ministry's target at the beginning of this year.
Boonkij Jitngamplang, chairman of FTI's Gem and Jewellery Industry Club, said operators in this industry were seriously affected by the stronger baht.
"If the BOT is unable to stabilise the baht, we will see a number of gem and jewellery operators close down their business this year," he said.
However, the central bank sees no need to intervene.
BOT deputy governor Atchana Waiquamdee said so far the baht has appreciated by four per cent from the beginning of this year but the central bank does not need to step into the market to halt the baht's movement.
"It is normal that the baht is stronger when there is demand for baht but we do not need to take care of it specifically," she said.
She conceded that the withholding reserve requirement could not prevent the appreciation of the baht as the measure did not cover portfolio investments by non-residents.
BOT governor Tarisa Watanagase said a large amount of capital has flowed into the country over the past few days but the baht movement remained in line with regional currencies. The baht rose by 5 per cent from the beginning of the year, compared to the Philippines peso at 6.7 per cent and the Indian rupee at 8.9 per cent.
The foreign funds flocking to the Thai bourse reflected the Kingdom's sound economic fundamental factors with a low P/E ratio.
Tarisa said despite the amount of foreign inflows into portfolios earlier, the baht had been stable due to demand for dollars from importers. The appreciating baht, however, does not translate into an absolute disadvantage for Thailand as it also indicated an increase in the Kingdom's purchasing power for imported goods.
She said the BOT would intervene in the foreign exchange market whenever the baht swung too much, just like in December last year when it appreciated by one per cent a week.
The BOT has encouraged institutional investors to invest abroad in order to increase investment choice and reduce pressure on the strong baht. However, they have exercised their rights to only 27 per cent of the approved ceiling. Last year, such investments increased sevenfold compared with 2005.
Deputy Prime Minister and Industry Minister Kosit Panpiemras attributed the rise of the baht to the fact that the business sector has began to become convinced that the Thai economy will be resolved for the better.
http://www.asianewsnet.net/biz.php?aid=10795