Thai May exports fall 22.5% year-on-year, but gold shipments surge

[webfact]

Thai May exports fall 22.5% year-on-year, but gold shipments surge

By Orathai Sriring and Satawasin Staporncharnchai

 

FILE PHOTO: A customer shows a piece of gold for sell at a goldsmith, as the demand for cash increased after the partial shut down caused by the outbreak of the coronavirus disease (COVID-19), in Bangkok, Thailand, April 16, 2020. REUTERS/Jorge Silva

 

BANGKOK (Reuters) - Thailand's exports in May dropped by a bigger-than-expected 22.5% from a year earlier, the weakest pace in more than 10 years, due to the impact of the coronavirus pandemic, the commerce ministry said on Wednesday.

 

The tumble compared with a Reuters poll forecast for a fall of 6.4% in exports, a major driver of Thai growth, and came after April's surprise 2.12% increase.

 

"Exports may not fall much further, but could take a long time to recover," ministry official Pimchanok Vonkorpon told a briefing, adding shipments could fall 5% this year.In January-May, exports declined 3.71% year-on-year.

 

The strength in the baht <THB=TH>, which was near a five-month high against the U.S. dollar on Wednesday, was also a risk that had not been reflected in May's export data, she said.

 

However, gold shipments jumped 735% in May from a year earlier. Excluding gold, exports declined 27.8% year-on-year.

 

The trend is likely to continue with benchmark gold prices <XAU=> near the highest in more than seven years on Wednesday. Thais are heavily invested in gold and will sell whenever prices go up, with the metal then exported.

 

The Bank of Thailand (BOT) recently said gold exports had added to upward pressure on the baht and it would consider steps to reduce the impact.

 

The BOT, which is expected to announce new measures soon, may further relax rules on fund outflows, limit some gold-related activity or allow more trading options, analysts and traders say.

 

"As we discussed, the BOT wants to control gold traders' forex transactions during night sessions," said Tanarat Pasawongse, chief executive officer of Hua Seng Heng Group. "The market is more volatile during such periods," he said.

 

In November, the BOT said it was prepared to approve gold futures trading in foreign currencies in the next phase, after allowing investors to trade gold in foreign currencies and to keep such proceeds in their foreign currency deposit accounts.

 

See the November forex measures here https://www.bot.or.th/English/PressandSpeeches/Press/2019/Pages/n6662.aspx

 

(Additional reporting by Kitiphong Thaichareon; Editing by Ed Davies)

 

-- © Copyright Reuters 2020-06-24

 

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[Isaan sailor]

So if the recent Baht/USD appreciation did not factor into their projection of a 27.8% reduction of exports—then look out, below.

Things can only get worse.

[tjo o tjim]

Does Thailand mine any gold?  If not... how do they call it an export?

[RichardColeman]

21 hours ago, webfact said:

Excluding gold, exports declined 27.8% year-on-year.

With month on month loses up to 27.8% and continuing I find that hard to believe they only predict 5% drop this year in exports

[ExpatOilWorker]

 

Why the link to an old 2019 press release?

 

21 hours ago, webfact said:

See the November forex measures here https://www.bot.or.th/English/PressandSpeeches/Press/2019/Pages/n6662.aspx

 

BOT Press Release No. 66/2019

The BOT relaxes rules to facilitate capital outflows and lessen pressure on the Thai baht

 

 

          The Thai baht has been under pressure due to imbalanced capital flows in the current environment of highly uncertain and volatile external conditions, the Ministry of Finance (MOF) and the Bank of Thailand (BOT) decided to relax regulations to facilitate capital outflows to help promote capital flow balance and lessen pressure on the baht. Such relaxations include allowing exporters to keep foreign currency proceeds overseas, allowing retail investors to invest in foreign securities without going through a Thai intermediary institution and allowing businesses and individuals to transfer funds abroad more freely. These relaxations will be effective 8 November 2019, with details as follows:

1. Repatriation of export proceeds

          • Exporters with proceeds below USD 200,000 per bill of lading will be allowed to keep the proceeds abroad, without a time limit (a relaxation from the current USD 50,000 threshold.) In 2018, bills of lading with value less than USD 200,000 amounted to export value of over USD 100 billion, accounting for almost half of all Thai exports.
          • Exporters with foreign currency proceeds exceeding the above new threshold will be allowed to use the revenues to offset foreign currency expenses, without having to repatriate the funds. Exporters can simply register with the BOT and provide necessary documentation to commercial banks, without prior approval from the BOT.
         • Rules on foreign currency deposit (FCD) account held with onshore banks will be streamlined to provide flexibility in managing foreign currencies.

         The above relaxations will help businesses reduce fund transfer costs and manage foreign exchange risks more efficiently. In addition, the BOT has been in discussion with the Minister of Finance to increase the threshold for export proceeds that do not need to be repatriated to USD 1 million per bill of lading within the next three months. Such proceeds account for approximately 80 percent of all exports.

2. Investment in foreign securities

         • Retail investors will be allowed to invest up to USD 200,000 per year in foreign securities, without having to invest via a Thai intermediary institution. Previously, they would need to meet a specified criteria in terms of asset ownership in order to invest directly.
          • The aggregate investment limit allocated to investors regulated by the Thai Securities and Exchange Commission (SEC) will be increased to USD 150 billion. This relaxation helps facilitate the increasing demand for foreign portfolio investment. In addition, investors will be able to retain the allocated limit for investment over a longer period, thus enhancing efficiency in investment planning and management. .

3. Outward transfers

          • Outward transfers, which are currently allowed based on a positive list of specific purposes, will now be allowed freely except for a few specific purposes (negative list), such as for settlement of FX/THB transactions with financial institutions abroad.
          • Individuals who wish to relocate abroad or transfer funds to relatives abroad will be able to do so freely. While those who wish to purchase real estate abroad will be allowed to do so up to USD 50 million per year as previously, but the property can now be in the name of a family member. This relaxation will help facilitate migration as well as sending children to study abroad.
          • Documentation will no longer need to be provided to commercial banks when conducting outward transfers of less than USD 200,000. This is an increase from the USD 50,000 threshold currently in place, to reduce the burden of providing documents and facilitate the ease of conducting foreign exchange transactions.

 4. Settlement of gold trading in foreign currency

          Thai investors will be allowed to trade gold in foreign currencies (through FCD accounts opened with onshore commercial banks) with designated gold trading companies that have received approval from the BOT. Previously, such transactions could only be done in baht. This is to reduce the pressure on the Thai baht from gold-related transactions. Investors are able to keep foreign currency proceeds from gold investment in their FCD accounts, without having to exchange into baht for subsequent purchases. This relaxation will increase investment options for investors and will be aligned with the more relaxed foreign investment regulations. In addition, the BOT is also prepared to approve gold futures trading in foreign currencies in the next phase.

 Bank of Thailand
6 November 2019

For inquiries: Financial Markets Operations Group
Tel: 0 2356 7349, 0 2283 5148

[Isaan sailor]

If it wasn’t so serious, it would be laughable.  Exports tanking and they don’t have a solution.  Bring the Baht down to Earth, and see what happens...

[Airalee]

On 6/24/2020 at 2:23 PM, webfact said:

However, gold shipments jumped 735% in May from a year earlier.

Who is selling the gold and who is buying?

[Trillian]

4 hours ago, tjo o tjim said:

Does Thailand mine any gold?  If not... how do they call it an export?

It doesn't have to be mined here in order to become an export, it just has to be sold and foreign money used buy it. It's the same with international tourism which is an export, foreign funds are brought into the country and spent on a holiday experience which is then exported overseas when the tourist returns home.

[Cake Monster]

1 hour ago, Isaan sailor said:

If it wasn’t so serious, it would be laughable.  Exports tanking and they don’t have a solution.  Bring the Baht down to Earth, and see what happens...

One of the major reasons the Thai Baht cannot be devalued is the extremely large amount of Household Debt.

Bring down the Debt, and the BOT have a tool  to use against the Baht strength.

A catch 22 me thinks.

[Mr Meeseeks]

1 hour ago, Isaan sailor said:

If it wasn’t so serious, it would be laughable.  Exports tanking and they don’t have a solution.  Bring the Baht down to Earth, and see what happens...

Problem is, the Baht is at its natural level against the worthless Pound, Dollar and Euro.

 

You have struggling economies, a lack of  leadership and massive quantitative easing to paper over the cracks. With the commies out of control on the streets, the wheels are really coming off in the West.

 

China and Thailand must be lovin' it. 

[robblok]

5 hours ago, Isaan sailor said:

So if the recent Baht/USD appreciation did not factor into their projection of a 27.8% reduction of exports—then look out, below.

Things can only get worse.

Does not say a thing if imports are equally affected the currency wont change. Doom thinkers seem to only think one way and don't see all sides.

[soalbundy]

1 hour ago, Mr Meeseeks said:

Problem is, the Baht is at its natural level against the worthless Pound, Dollar and Euro.

 

You have struggling economies, a lack of  leadership and massive quantitative easing to paper over the cracks. With the commies out of control on the streets, the wheels are really coming off in the West.

 

China and Thailand must be lovin' it. 

Why would they love the destruction of their export markets? Also the demise of the West has been screeched out time and time again and here we still are. Japan was supposed to become a giant bigger than America, then it was China......all dreams turn to ashes. The West still has a stranglehold on banking and commerce, you can't break hundreds of years of experience and connections in a decade.

[BritManToo]

45 minutes ago, soalbundy said:

Why would they love the destruction of their export markets? Also the demise of the West has been screeched out time and time again and here we still are. Japan was supposed to become a giant bigger than America, then it was China......all dreams turn to ashes. The West still has a stranglehold on banking and commerce, you can't break hundreds of years of experience and connections in a decade.

Yeah, what a disappointment Japan was to the soothsayers.

I remember the days when everything had 'Made in Japan' on it.

The rate their women are refusing to reproduce even their population will be gone in 100 years.

Edited June 25, 2020 by BritManToo