Dropping yuan will affect baht, Thai exports: economists

[webfact]

Dropping yuan will affect baht, Thai exports: economists

By Somluck Srimalee,
Phuwit Limviphuwat
The Nation

 

 

The depreciation of the Chinese yuan will affect the baht and Thailand’s export values for the rest of the year, which will force the Bank of Thailand to come up with measures to manage the currency, economists say.

 

“The baht will fluctuate and even depreciate when foreign investors take their money out in response to the Bank of Thailand’s move to bring down the balance in non-resident accounts from Bt300 million to Bt200 million per person. However, the currency should appreciate again as Thailand is a safe haven for investors due to its high-foreign currency reserve and a public debt that is only 40 per cent of the gross domestic product,” Dr Somchai Pakapaswiwat, an economist and independent academic, told The Nation on Tuesday.

 

However, he said, when the baht appreciates against the US dollar, it will also rise against the Chinese yuan, which will have a direct impact on Thai exports, because Chinese products will become cheaper. 

 

“China may also dump its products in the Thai market, especially if Chinese goods work out to be cheaper than local products,” Somchai said. 

 

He added that since the trade war has now become a currency war, it will have an adverse effect on all countries, which is why the South Korean won has also dropped against the greenback. 

 

Somchai believes the central bank may launch other measures to manage the baht, especially since it is appreciating over currencies from countries that are direct export competitors.

 

Research by the Siam Commercial Bank’s Economic Intelligence Centre shows that the baht has risen 5.1 per cent against the dollar since January 1, while the yuan has dropped 2.3 per cent. 

 

“Recent events in the US-China trade war will definitely have negative ramifications on Thai exports,” said Supant Mongkolsuthree, chairman of the Federation of Thai Industries.

 

He added that labelling China as a currency manipulator may lead to a further escalation in the ongoing trade war and set off risks such as the tariff impact spilling over to Thailand, a slowdown in the global economy and currency volatility. 

 

Currently, most Thai exporters use the US dollar as the currency for cross-border trading, Supant said. Hence, he said, to reduce risks induced from volatile currencies, we must promote the use of local currencies in cross-border trade. 

 

 

Recent tensions between the US and China will likely contribute to a hardening of positions from both sides, said Martin Petch, vice president of Moody’s Sovereign Risk Group.

 

“It also increases the likelihood of US tariffs on Chinese products to rise beyond current levels, followed by further retaliatory measures by China,” he continued. “Unless negotiations between the US and China resume rapidly, this latest development is likely to create negative spill-over effects in both China, the US and globally, and particularly in Asia.”

 

Furthermore, he cautioned, market expectations of further yuan devaluation may force other currencies to drop, particularly those with strong trading ties to China.

 

Meanwhile, the Thai National Shipping Council’s chairman Ghanyapad Tantipipatpong said the private sector was worried about the yuan depreciation, but had yet to evaluate its impacts on Thai exports.

 

She added that preliminary estimates show that a weaker yuan will increase the price of goods exported from Thailand by 10 per cent. 

 

She added that the council will monitor the export market in the last quarter to see if the yuan depreciation has had any impact. 

 

The council's vice chairman Visit Limlurcha agreed that a weaker yuan will automatically make Thai export products, especially electronics, more expensive. 

 

Ghanyapad also said the council wants related state agencies to stop the baht from getting any stronger, because if the baht appreciates beyond the Bt30 to a US dollar mark, it will have an adverse impact in the export market. 

 

The council has also drawn up a strategy for the government, and one of its recommendations is for the Commerce Ministry to set up a war room to closely monitor the export situation and enhance the sector. 

 

Moreover, the ministry should look for new promising export markets and hold off on increasing the daily minimum wage.

 

Source: https://www.nationthailand.com/business/30374354

 

-- © Copyright The Nation Thailand 2019-08-07

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[Chang_paarp]

So it is the fault of the dropping Yuan.....

[adam1948]

No it's not 5% it's 6%

We keep a daily/weekly/monthly
recorded watch on the Baht vs

USD. It effects our household

budget a lot ... the constant

fluxuation drives us batty :(

 

Jan Baht  32.89795  vs USD
Aug Baht 30.83921  vs USD

That's 2 baht drop from Jan to Aug
2 baht divided by 32. 89795 = 6%

http://www.exchangerate.com/currency-converter/USD/THB/1.00/?XR-200Plus_Converter=convert&calc_short_from_iso=239&calc_short_to_iso=225

[dcsw53]

4 hours ago, webfact said:

Research by the Siam Commercial Bank’s Economic Intelligence Centre shows that the baht has risen 5.1 per cent against the dollar since January 1, while the yuan has dropped 2.3 per cent. 

Bullshit
Dec 31 close   USD 1 = THB 32.54          Today     USD 1 = THB 30.72
                     CNY 1 = THB   4.73                        CNY 1 = THB 4.37

They have both weakened against THB, as has almost all other currencies, EUR, GBP and AUD. 

[WeekendRaider]

be as hedged for a much stronger Thai Baht if you get a significant amount of income fixed in US dollars.  

ignoring folks like Larry Summers commentary last night could be almost as bad as not having read Mandy Fruend last May, or Rosenfeld in January.  and living in Thailand.  any of those 3, or not having such a viewpoint as possibilities in your plans.  one for the exchange rate thing, which is bigger than just exchange rates..... and a plan for the other thing that's even bigger.  plans, instead of just more handy girlie man talk to lean back on.  a great thang to have if The 'keey' hits The 'phahtloomb'.

Edited August 7, 2019 by WeekendRaider

[Kinnock]

I guess this will further impact tourist arrivals from China too?

 

[Isaan sailor]

Yep, the chickens are coming home to roost, Thailand.  You’ve become addicted to foreign hot money (building up your reserves and only God knows what else).  You’ve made bilateral trade deals with the ChiComs (who now will compete with you) And now exports and tourism will contract, along with your dollar-based agri-Business.  Good luck, Thailand—you’ll need it.

[Enzian]

So which is it? Will the baht follow the yuan, or is the relationship inverse? Or does it depend on the dynamics of the moment?

[yodsak]

Quote from webfact:

1 hour ago, dcsw53 said:

the baht has risen 5.1 per cent against the dollar since January 1, while the yuan has dropped 2.3 per cent. 

 

1 hour ago, dcsw53 said:

Bullshit
Dec 31 close   USD 1 = THB 32.54          Today     USD 1 = THB 30.72
                     CNY 1 = THB   4.73                        CNY 1 = THB 4.37

They have both weakened against THB, as has almost all other currencies, EUR, GBP and AUD. 

He's saying the yuan has dropped against the dollar... 

Edited August 7, 2019 by yodsak

[NightSky]

1 hour ago, Isaan sailor said:

Yep, the chickens are coming home to roost, Thailand.  You’ve become addicted to foreign hot money (building up your reserves and only God knows what else).  You’ve made bilateral trade deals with the ChiComs (who now will compete with you) And now exports and tourism will contract, along with your dollar-based agri-Business.  Good luck, Thailand—you’ll need it.

I genuinely feel for the poorer rurally based Thai people who will survive as always but they will feel the pinch more than anyone.

 

the poorest always suffer the most

Edited August 7, 2019 by NightSky

[RichardColeman]

8 hours ago, webfact said:

She added that preliminary estimates show that a weaker yuan will increase the price of goods exported from Thailand by 10 per cent. 

With no exports, no tourists, I can't think of how Thailand can get out of their hole - though Thai logic will dictate to dig an even bigger one to fill in the first smaller one

[BestB]

Only yesterday some Thai guru proclaimed it will not and does not affect thai economy.

 

thank goodness there is some one with a brain who

understands , though I feel they still do not fully understand how much trouble it is and will be for Thai economy .

 

as it was, with strong baht buying from China was cheaper, now it will be even more cheaper, perhaps even cheap enough for many to reconsider their long term ties to Thai exporters 

[Isaan sailor]

Ironic how ChiComs have gone from a best buddie to Thailand (submarines, high speed trains, BRI) to a fierce competitor (devalued Yuan, multiple Mekong dams).  You can choose your friends, but you cannot choose your enemies.

[Cadbury]

40 minutes ago, BestB said:

Only yesterday some Thai guru proclaimed it will not and does not affect thai economy.

 

thank goodness there is some one with a brain who

understands , though I feel they still do not fully understand how much trouble it is and will be for Thai economy .

 

as it was, with strong baht buying from China was cheaper, now it will be even more cheaper, perhaps even cheap enough for many to reconsider their long term ties to Thai exporters 

The Prime Minister is giving the impression he is an economics mastermind by appointing himself to oversee the the economy of the country.

Any hope there might have been seems to have now gone out the window.