Private sector seeks stabilisation of strengthening baht currency

The Thai Chamber of Commerce has urged agencies concerned to try to prevent the baht currency from fluctuating so extremely and to keep its value at an appropriate level, in line with the domestic and external economic situations.

The Thai baht strengthened to a 19-month high today (32.93 baht/USD), causing alarm among Thai exporters and tourism operators, fearing that both sectors will be badly affected.

Today, Pote Aramwattananon, vice president of the Thai Chamber of Commerce, referred to information from the Kasikorn Research Centre showing that, for each percentage point increase in the Thai baht against the US dollar, Thai exporters sustain a revenue loss of about 100 billion baht per annum, or 0.5% of GDP, and the Thai baht has strengthened by between 9% and 10% within a short period.

Exported products, which use mostly local materials, such as food and agricultural products, will be the hardest hit by extreme baht fluctuations, because the export price will automatically increase by about 10%, making them less competitive in the global market, said Pote.

Rapid fluctuations in the baht currency, he said, make it difficult for Thai businesses to plan their production and marketing plans in advance and to adjust to market demands effectively.

Thai Chamber of Commerce President Sanan Angubolkul, meanwhile, said chamber board members will soon meet with the finance minister and central bank governor for discussions on appropriate measures to address such pressing economic problems.

Commenting on the baht currency, he said that ideal rate should be 34 baht/USD.

Regarding the 400-baht minimum wage, Pote said most businesses oppose a standard wage for all workers, adding that it should be adjusted in line with the economic situation in each province.

Thanawat Pholvichai, rector of the University of Thai Chamber of Commerce, suggested that the Monetary Policy Board cuts the interest rate to an appropriate level, now that the US Federal Reserve has cut its policy rate by 0.50%, for the first time in several months, from between 5.25% and 5.50% to 4.75% and 5.00%.

He also estimated that the recent and current flooding across the country will cause about 21.5 billion baht in damage, or 0.12% of GDP, on the assumption that the flooding will ease in the next 15 days.