Baht likely to continue to strengthen this year

BANGKOK: -- The Thai baht has appreciated by over 14 per cent since late 2005 and is likely to continue to strengthen, according to the joint private-sector committee.

Speaking at a workshop on “Baht Value” held by the tripartite committee comprising the Thai Chamber of Commerce, Federation of Thai Industries, and Thai Bankers’ Association, FTI’s Deputy Secretary Thanit Sorat revealed the baht had risen by 14.5 per cent since late 2005, the strongest in eight years, while the Chinese yuan appreciated by only 3.4 per cent and Koean won by 7.5 per cent.

The sharp appreciation stemmed mostly from the baht speculation by the British Virgin Island Fund and Singapore’s funds. It had affected exporters, who counted mainly on local raw materials, he said.

Mr. Thanit projected the baht would continue to strengthen while foreign investors would keep a watch on new measures to be issued by the Bank of Thailand.

According to the FTI’s survey, 52.7 per cent of entrepreneurs would be affected if the baht hovered around 37-38 to the US dollar. But should the currency strengthen to 33-34 to the dollar, 86.7 per cent would be

impacted.

He said the government needed to pay attention to the export sector because it represents 67 per cent of the gross domestic product (GDP) and has a workforce of up 5.5-6 million.

However, Mr. Thanit said, Thai exporters needed to adjust themselves to the baht volatility as well.

The survey showed most entrepreneurs wanted to see the baht stay at a range of 38-39 to the dollar. But FTI projected the baht would hover around 37-38 to the dollar, which is a suitable level that industrial

operators could accept.

Mr. Thanit said the central bank’s decision to replace a 14-day repurchase rate with a one-day rate and reduce the rate to 4.75 per cent was part of its efforts to accelerate local consumption and make the baht not become too strong.

The policy interest rate cut would prompt commercial banks to lending rates and encourage depositors to bring their money for investment, he noted.

So, he viewed local consumption would be a key drive for the economic growth this year while the exports would grow at a slower pact at 9-10 per cent, which is below 12 per cent projected earlier by the Commerce Ministry.

The country’s GDP would grow 4.5-5.5 per cent, which is higher than 4.5-5 per cent expected earlier, he said.

--TNA 2007-01-19

The sharp appreciation stemmed mostly from the baht speculation by the British Virgin Island Fund and Singapore’s funds

and where does ' his nibs ' keep the pennies ?

Now let's get this in perspective.

The baht has strengthed against the US dollar, because the said currency is in decline.............

Down almost 25% against the UK Pound over the last 3 years........

The baht has simply held its own.

As I showed in a previous post, the baht was at it highest last March against other major currencies.