Commerce minister plea: Time to cut the baht and boost the rates

[webfact]

Commerce Minister Pichai Naripthaphan called on the Bank of Thailand (BoT) to slash interest rates and stabilise the baht in a bid to boost exports and prop up GDP.

 

In a policy statement issued today, Pichai slammed the current strength of the baht, which he claims is hitting exports hard. With export growth expected to be sluggish this year, he’s calling on the central bank to step in and tackle the currency’s soaring value.

 

Today, the baht hit 33 per US dollar, its highest level in more than 18 months. In the past month alone, it has surged by 5-6%.

 

This stronger baht is squeezing exporters, particularly those dealing in agricultural goods and eating into their profit margins.

Pichai also emphasised the urgent need for the central bank to reduce interest rates to improve liquidity and make funding more accessible.

 

“Monetary policy is more crucial than fiscal policy as the Bank of Thailand sets interest rate policy and influences the exchange rate, which impacts exports—currently making up 60% of GDP.

“Beyond its regulatory role, the Bank of Thailand should also support the continuity of economic activities during crises.”

 

The Commerce Ministry intends to further deliberate on this issue shortly.

 

Last year’s economic expansion was 1.9%, a period during which wealth and income became more concentrated among the wealthy, while the poorer segments faced increased financial distress, resulting in higher household debt.

 

The ministry has promised to introduce new stimulus measures to revive the economy.

 

Pichai is expected to continue the policies of his predecessor, Phumtham Wechayachai. These policies include reducing expenses, increasing income, expanding opportunities, and balancing the needs of citizens, consumers, agricultural producers, and business operators to ensure collective benefit.

 

These policies aim to proactively integrate efforts between provincial commerce offices and trade ambassadors to enhance the competitiveness of Thai products in the global market.

 

They also involve amending laws and regulations to adapt to the evolving global trade landscape, driving grassroots economic policy, accelerating export growth by restructuring the export sector to respond to new S-curve industries, promoting the use of free trade agreements, and supporting both inbound and outbound investment, reported Bangkok Post.

 

by Bob Scott
Picture courtesy of the Bank of Thailand

 

Source: The Thaiger 

-- 2024-09-17
 

 

[ozz1]

Yes it's eventually going to hurt tourism and exports but it has to be approved by the elites and give them time to put their money overseas we can only hope

[spidermike007]

Considering the fact that exports are down, new and used car sales are way down, home sales are down, and the economy is suffering with over 7,000 steel companies having been shuttered over the last few years, it's mighty weird that the baht is as strong as it is. I understand some of it has to do with the strength of the dollar, but it also seems disproportionately high relative to other regional currencies. 

 

For an economy that's already in trouble it would seem that it would be in their best interests to figure out a way to lower their currency. 

[watchcat]

19 minutes ago, ozz1 said:

Yes it's eventually going to hurt tourism and exports but it has to be approved by the elites and give them time to put their money overseas we can only hope

 

But they'll have to retrieve it and pay taxes.

[hotchilli]

27 minutes ago, ozz1 said:

Yes it's eventually going to hurt tourism and exports but it has to be approved by the elites and give them time to put their money overseas we can only hope

And pay world wide taxes?

[kingstonkid]

28 minutes ago, spidermike007 said:

Considering the fact that exports are down, new and used car sales are way down, home sales are down, and the economy is suffering with over 7,000 steel companies having been shuttered over the last few years, it's mighty weird that the baht is as strong as it is. I understand some of it has to do with the strength of the dollar, but it also seems disproportionately high relative to other regional currencies. 

 

For an economy that's already in trouble it would seem that it would be in their best interests to figure out a way to lower their currency. 

The challenge that Thais face is the same in most countries where credit cards are the main means of payment.

 

The problem will not be solved with lower interest rates.  The problem can only be solved if Thais try to live a sustainable living as outlined by the past king.

 

Most second hand cars are because people could not afford them.  Look also at the housing market. If not for foreign buyers the condo market would be dead.

 

 

[LOS1]

 

Quote

“Beyond its regulatory role, the Bank of Thailand should also support the continuity of economic activities during crises.”

You mean "manipulation"?

[Bluetongue]

I read on the Nikkei recently Thailand had the best two months on current account surpluses for years in June July. I had assumed that was the reason for the baht going up

[John Drake]

The head of the Bank of Thailand is a stubborn mule who believes it's better to have a low GDP and an overly strong baht, where Thailand can't compete against its neighbors. Governor paid by the people he is screwing over.

 

Quote

He also criticised the governor of the Bank of Thailand, Sethaput Suthiwartnarueput, over his reported remark that Thailand should not place too much emphasis on increasing GDP, saying that such an opinion is incorrect and questioning from which institution he had graduated.

 

Speaking at a press conference today, the commerce minister made clear that he has no personal grudge against the governor, but he believes that allowing the baht to strengthen against the US dollar too much, while the currencies of Thailand’s trading competitors are weak, is not right as it has negatively affected Thai exports.

 https://world.thaipbs.or.th/detail/54759

 

[ikke1959]

Stop the manipulation of the exchange rate...... Thailand is being watched for a while already because  of this... Nothing to do with a strong THB... The Thai economy is just not doing well and the political situation is also very weak. No reasons for the  THB to be strong except that it is manipulated

[harryviking]

I am still sitting on cash that I want to transfer to Thailand. I will not if the exchange rate does not get better. 10% better and I will. Come on Thailand, you lose every day on that strong Baht!! Rates are being cut everywhere, so I am not sure any longer about what the consequences will be. The Fed will certainly cut on Wednesday....maybe as much as .5 %.

Edited September 17 by harryviking
spelling mistake

[gargamon]

2 hours ago, ozz1 said:

Yes it's eventually going to hurt tourism and exports but it has to be approved by the elites and give them time to put their money overseas we can only hope

Tourists don't care if it's up or down 10%. It's a temporary cost for them. Expats living here care a lot more.

[soalbundy]

1 hour ago, Bluetongue said:

I read on the Nikkei recently Thailand had the best two months on current account surpluses for years in June July. I had assumed that was the reason for the baht going up

Yes, plus a healthy amount of foreign money sloshing about in the vault, their central bank has some very savvy people.

[Purdey]

When the Baht was 25 to the dollar, Thailand was known as a regional tiger. 

The central bank deals with monetary policy not commerce.

[Sydebolle]

Quite obviously  not fine-tuned with the tourism goons as the latter proclaim double and triple digit increases. 

[RichardColeman]

2 hours ago, Bluetongue said:

I read on the Nikkei recently Thailand had the best two months on current account surpluses for years in June July. 

I dare say if every other nation refused to pay out a reasonable pension and unemployment rates then they too would have a boom in the current account surplus !  If Thailand paid reasonable pensions and unemployment they would be broke

[Wrwest]

2 hours ago, gargamon said:

Tourists don't care if it's up or down 10%. It's a temporary cost for them. Expats living here care a lot more.

I am waiting to bring a bit extra in but not till I can get a better exchange rate for the USD. My monthly transfer I use for immigration remains sufficient for my usual monthly expenses (family of 3).

[realfunster]

Interest rates are already low (comparable to most places) and inflation is negligible.

 

Exchange rate movements are not easy to predict but, in theory, reducing interest rates would likely help weaken the Baht. Given already low inflation, unless the BoT are worried about economic/debt overheating, I can't see why they wouldn't be doing that.

 

The US Fed will be lowering rates this week, I would not be surprised if Thailand followed suit shortly with a 25 basis point cut.