Weak baht could be Thailand’s saviour for exports

[webfact]

file photo

 

OPINION | by ASEAN NOW

A lower baht was recently welcomed by Minister of Finance, Arkhom Termpittayapaisithm, as he predicted that the kingdom would ease entry criteria to boost foreign tourism while achieving export growth of between 5% and 6% in 2022.

A leading Thai university professor predicts that, technically, Thailand has already entered a period of 1970s stagflation as he lowered the economic growth projection for the country to between 2% and 3% for the year with inflation running at 5%. 

This weaker baht will naturally also increase Thailand's price competitiveness as exporters can sell their products at lower prices than competitors whose exchange rates are stronger. 

Combined with faster recovery in developed countries and China, the weaker baht will further boost exports and shore up the economy. 

Tourism will be another beneficiary as holidays in the land of smiles will cost less too.

Protectionism 

 

On the export front, Thailand as a major exporter of rice, chicken, and sugar seems set to benefit as many other Asian neighbors are currently actually limiting shipments of agricultural commodities, to help their own consumers from surging prices.

Recently Malaysia banned poultry exports and India has now implemented steps to keep more of its sugar at home. 

 

The rising food protectionism and price rallies are in fact good news for Thai producers that are enjoying strong harvests this year after back-to-back droughts. 

 

Now that the Thai baht is at a five-year low earlier this month, this is naturally also making the country’s shipments relatively cheaper.

 

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World food prices have risen to multi-year highs, as the global economic recovery from the pandemic coincided with Russia’s invasion of Ukraine, which has disrupted the availability of many agricultural commodities. 

 

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Thai food exports this year now look likely to surpass a forecast in January for a record 1.2 trillion baht ($35 billion) made by the Bangkok-based National Food Institute. 

“If the war and the food-supply crunch continue, food prices will remain high and that will benefit us,” said Sirivuthi Siamphakdee, a director of Kaset Thai International Sugar Corp. and former vice chairperson of the Thai Sugar Millers Corp., an industry association.

 “Thailand is unlikely to suffer from food shortages like other countries as it’s the kitchen of the world,” he added.

Thai and Vietnam cooperation muted

Thailand is the world’s No. 2 rice exporter and Vietnam is the third. Combined, they both account for a quarter of the world’s rice trade. 

India is the largest with a 40% market share. 

Currently China, the Philippines, and Nigeria are top importers. 

Thai premier Prayuth Chan-Ocha has even suggested that Thailand and Vietnam should consider jointly raising rice prices to boost their bargaining power in the global market.

Thailand and Vietnam combined make up a quarter of the global rice trade

According to the USDA Foreign Agricultural Service.

 

Such a step will benefit millions of rice farmers in the two countries who have struggled with rising costs while prices of the grain have remained subdued, Prayuth’s spokesperson Thanakorn Wangboonkongchana said in a statement.

 

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Vietnam’s Deputy Agriculture and Rural Development Minister Tran Thanh Nam met with Thai officials last week to discuss a framework for cooperation.

The threat to boost rice prices from the two major exporters comes amid growing food protectionism and run-away inflation. 

 

There’s concern that India may restrict rice exports after similar moves in wheat and sugar, upending global food markets already roiled by Russia’s invasion of Ukraine. 

While Thailand is not contemplating any curbs on shipments, it’s keen to milk the opportunity as import-dependent countries seek to lock in grain supplies. 

Thailand’s rice exports are benefiting from a rebound in global demand as the pandemic eases and a slump in its currency to a five-year low makes its supplies more competitive. 

Shipments may reach as high as eight million tons this year, up from 6.1 million tons last year, as Commerce Minister Jurin Laksanawisit told reporters. 

According to industry officials, Thai sugar and chicken exports are also set to benefit from export curbs placed by India and Malaysia. 

At a time when Thailand has been concerned about its massive decline in income generated by tourism, perhaps the light at the end of the tunnel could come from the rice fields across the country.

 

 

-- © Copyright  ASEAN NOW 2022-05-30

 

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[smedly]

2 hours ago, webfact said:

A lower baht was recently welcomed by Minister of Finance

when ?

[RandiRona]

2 hours ago, webfact said:

Thailand is unlikely to suffer from food shortages like other countries as it’s the kitchen of the world,

Where do I start?? But then would that matter?? 

So HaHaHa...

[starky]

What weak baht? Did it dip a few satang in the last couple days? Damn must have misse it 

[jacko45k]

46 minutes ago, starky said:

What weak baht? Did it dip a few satang in the last couple days? Damn must have misse it 

If anything it seems to have recovered a bit since mid-May against the usual yardstick, USD. Been flat against sterling and a nice steady rise v Euros. Heaven knows where it is going but USD likely to strengthen.

[RichardColeman]

Problem with a lower baht is its 'blippy'. When my £ goes up against the baht it blips up, it does not stay up. You cannot expect anything financial to change when the baht is madly still high and only comes down for say 12 hours before rocketing up again - just seems it goes down and someone hits a panic button to fix it back

[JoePai]

3 hours ago, smedly said:

when ?

Now over 34 / USD

[Pouatchee]

24 minutes ago, JoePai said:

Now over 34 / USD

Unfortunately those nice exchange rates, as advertised, are not the rate I get when I try to exchange.

 

 

 

[SooKee]

Weak as in Double Espresso weak? ????

[Isaan sailor]

Baht has strengthened over 2% vs USD in last two weeks.  Did they write this article two weeks ago?

[Isaan sailor]

1 hour ago, Pouatchee said:

Unfortunately those nice exchange rates, as advertised, are not the rate I get when I try to exchange.

 

 

 

You got that right.  We’re stuck in the 33’s now.  However, if you have a no-fee credit card from a US bank—you can certainly get the higher international rate.

[aussiexpat]

What weak baht? Aussie $ is barely getting 24 baht now, was over 25 last month

[hotchilli]

6 hours ago, smedly said:

when ?

Tomorrow... [always tomorrow]

[aussiexpat]

3 hours ago, Pouatchee said:

Unfortunately those nice exchange rates, as advertised, are not the rate I get when I try to exchange.

I always use this site which gives the daily TT rate on the street

 

https://m.facebook.com/ttexchange/posts/?ref=page_internal&mt_nav=0

[RafPinto]

Leally?

 

Tell his to my bank. £££££

[RafPinto]

1 hour ago, aussiexpat said:

What weak baht? Aussie $ is barely getting 24 baht now, was over 25 last month

Haven't you seen that Billions of high spending, gold necklace Indians are on their way.

40 Million tourists was yesterday.
Soon, we talk about a Billion.

[digger70]

6 hours ago, starky said:

What weak baht? Did it dip a few satang in the last couple days? Damn must have misse it 

They are dreaming the THB is still stronger than Jan 2018. 

I look what I get for the  $ AU Not the $ US

[Harveyboy]

weak baht.? against what currency

Needs to look at the euro...dipstick

[Henryford]

1 hour ago, aussiexpat said:

What weak baht? Aussie $ is barely getting 24 baht now, was over 25 last month

And the pound in the 42s. It's only slightly weak against the dollar.

[Mavideol]

9 hours ago, webfact said:

A lower baht was recently welcomed by Minister of Finance, Arkhom

they must be speaking about some other baht as the one in Thailand keeps appreciating.....was and I do mean WAS almost 35 (34.8309 may 16)  to the USD and it started the down fall to 34.11 today so where is the lower baht maybe Prayut and his gang of cronies have some purchases to make

[Isaan sailor]

9 minutes ago, Mavideol said:

they must be speaking about some other baht as the one in Thailand keeps appreciating.....was and I do mean WAS almost 35 (34.8309 may 16)  to the USD and it started the down fall to 34.11 today so where is the lower baht maybe Prayut and his gang of cronies have some purchases to make

34.11?  Try 34.06 today.  And with another Fed rate increase of 50 basis points due next month—they’ll probably jack up the Baht even more…

[RafPinto]

14 minutes ago, Mavideol said:

they must be speaking about some other baht as the one in Thailand keeps appreciating.....was and I do mean WAS almost 35 (34.8309 may 16)  to the USD and it started the down fall to 34.11 today so where is the lower baht maybe Prayut and his gang of cronies have some purchases to make

Hi-so's have to send their kids to the US universities and soon, holiday season starts again when the wealthy travel abroad and look to buy some properties. Need to push the baht up again.

[John Drake]

5 hours ago, Isaan sailor said:

You got that right.  We’re stuck in the 33’s now.  However, if you have a no-fee credit card from a US bank—you can certainly get the higher international rate.

Social Security transfers coming into Thailand at the end of this week. Expect the baht to "strengthen" right around the 3rd through 6th. Looks like another bank holiday on 3 June, so don't expect direct SS transfers until the 6th.

[Mavideol]

1 hour ago, John Drake said:

Social Security transfers coming into Thailand at the end of this week. Expect the baht to "strengthen" right around the 3rd through 6th. Looks like another bank holiday on 3 June, so don't expect direct SS transfers until the 6th.

mine will arrive on the 2nd or so I expect 555

[John Drake]

8 minutes ago, Mavideol said:

mine will arrive on the 2nd or so I expect 555

I should be so lucky.

[Mavideol]

8 minutes ago, John Drake said:

I should be so lucky.

it's always the 3rd but when the 3rd happens to be on a Saturday they send it on Friday and when the 3rd it's on a holiday they will send it to us on the Thursday  before.... let's keep fingers crossed 555

[John Drake]

Just now, Mavideol said:

it's always the 3rd but when the 3rd happens to be on a Saturday they send it on Friday and when the 3rd it's on a holiday they will send it to us on the Thursday  before.... let's keep fingers crossed 555

Alas, the 3rd is a Thai holiday, which means my American Social Security will probably be sent out through NYC Bangkok Bank (if it is not closed, too) around 1pm or 2pm Thailand time on 3 June. And that probably means a wait until Monday 6 June for me. 

[itsari]

On 5/30/2022 at 12:18 PM, digger70 said:

They are dreaming the THB is still stronger than Jan 2018. 

I look what I get for the  $ AU Not the $ US

The US dollar is the king of currencies. 

Aussie dollar is way down the honours list

[digger70]

18 hours ago, itsari said:

The US dollar is the king of currencies. 

Aussie dollar is way down the honours list

That doesn't matter that's the Only one that counts for me and for other people from AUS who get paid in $AU

[mommysboy]

Weakening? Coming off its highs against the dollar maybe.