Strong baht hits exports off target
Thailand is highly unlikely to achieve its export growth target of 8-9% this year, as the baht’s continued rise is putting more pressure on shipments.
At the economic ministers’ meeting chaired by Prime Minister Yingluck Shinawatra, the Commerce Ministry reported that it is increasingly concerned about export performance in light of the strong baht.
The Bank of Thailand was the first institute to revise down the country’s export growth to 7.5% from the previous projection of 9%.
The Commerce Ministry has yet to make any new export forecasts.
It also said the ministry in conjunction with Team Thailand and the private sector is set to organise roadshows to India, Indonesia, Myanmar, China, Russia, Brazil and Africa in its best bid to achieve the export target.
Finance Minister Kittiratt Na-Ranong has again stepped up pressure on the central bank, the Stock Exchange of Thailand and the Securities and Exchange Commission, calling on the three agencies to closely monitor the baht’s appreciation.
“There was definitely some currency speculation, and the government is feeling uncomfortable with the baht’s speculation,” he said.
Mr Kittiratt has also urged private firms to cash in on the baht appreciation to step up the imports of machinery, adding that state enterprises will be told to have early repayment for debt in foreign currencies.
Areepong Bhoocha-oom, permanent secretary of the Finance Ministry, said the government aims to repay 40-50 billion baht of external debts owed by the government and state enterprises before the middle of this year in a move to ease the baht’s appreciation.
According to the Public Debt Management Office’s report, Thailand’s foreign debts as of December amounted to 358.26 billion baht. Of that total, 308.50 billion baht was owed by state-owned enterprises (non-financial institutions), 44.92 billion was borrowed by the government from abroad, and 4.83 billion was owed by state financial institutions guaranteed by the government.
Mr Kittiratt said he still believed the massive economic problems in the US and Europe will have a slight impact on the Thai economy in the short term. Fluctuations in gold prices should not last in the long run, he added.
The government is also monitoring household debt, particularly among low-income earners.
Payungsak Chartsutthipol, chairman of the Federation of Thai Industries (FTI), added that the baht’s appreciation has now become a key risk factor for Thai exports.
The baht has gained 5.02% so far this year, a relatively high rate compared with the 0.74% rise of the Chinese yuan, 0.69% for the Indian rupee and 0.1% for the Malaysian ringgit.
Mr Payungsak said the FTI will call a meeting on April 24 to discuss the impact of the baht appreciation and measures to help Thai exporters.
In a related development, the FTI yesterday reported the Thai Industries Sentiment Index (TISI) decreased for the third consecutive month from 95.5 points in February to 93.5 in March mainly due to stronger baht against the US dollar.