Strong baht has Thailand looking to help exporters

globeandmail.com

Associated Press

BANGKOK
— The Thai government plans to take measures to help exporters after
the Thai baht rose to a new high against the U.S. dollar, Prime
Minister Surayud Chulanont said Friday.

The baht rose to a fresh 9 1/2-year high at 34.65 to the U.S. dollar
earlier Thursday. By Friday it had eased back a bit to 34.88.

The Thai currency has strengthened nearly 15 per cent since January
2006. A stronger baht makes Thai exports less competitive and erodes
overseas earnings when repatriated.

“It is a matter of concern for everyone,” Mr. Surayud told reporters.
“The Bank of Thailand and the Finance Ministry are closely monitoring
the situation.”

“We are looking to introduce measures to ease the impact on exporters,” he added, without elaborating.

Deputy Prime Minister Kosit Panpiemras said he would meet with the
Federation of Thai Industries next week to discuss the impact of a
firmer baht on export competitiveness and how the government can help
exporters cope with the situation.

The recent steep rise in the baht was caused mainly by heavy exporter
selling of dollars and not speculative pressure on the currency,
Pongpen Ruengvirayudh, the central bank’s senior director for financial
markets and reserve management, said Thursday.

“Exporters rushed in to sell the dollar aggressively since late
February, fearing the baht may rally further. It’s a self-fulfilling
prophecy — the more actively they sell, the quicker the baht rises,”
said Mr. Pongpen.

In December, the central bank imposed capital controls to keep the baht
currency from appreciating too quickly against the dollar. The move
required a one-year, 30-per cent withholding on many types of capital
inflows and caused an instant uproar that sent the Thai stock market
plunging a record 15 per cent.

In response, authorities quickly rescinded several aspects of the
controls, exempting stock buying and foreign direct investment, while
maintaining the measures on bonds.

A further easing of the restrictions was announced earlier this month by the central bank.The Globe and Mail

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