Weaker Baht Won't Help Exports Now: Thai Central Bank

[wolfmanjack]

Will a weaker Baht help the economy?

You're a rice buyer, you need 500 ton of rice. A cheaper Baht won't make you buy more, you will just pay cheaper.

Now you're a tourist, you have a budget of $1,000. The more Baht you have for your dollars, the more you will spend, in Baht term of course, but that's what's important for the local economy.

So you may agree that a weaker Baht won't (in the short term) help exports, but it sure will help the local tourist-based economy.

I am in the export business. My two main competitors are Indonesia and Vietnam. In 2003 the average for the baht was 207 IDR and 387 VND. So far in 2009 the average is 330 IDR and 513 VND. The baht has strengthened considerably against these 2 currencies. If they weakened the baht to be competitive with these two currencies again I would have a dramatic increase in business. I know this for a fact because I am still getting inquiries from new customers asking me to compete on price with vietnam and indonesia. They like my quality better but the price difference makes most go for the lower price even when I only take a 10% profit.

You are right ... we have to compare what is comparable. The exact same product manufactured in Vietnam and Thailand is way cheaper in Vietnam ... I used to manufacture in Thailand, i moved to Vietnam ... simple solution ... exchange value of the currency is in favor of Vietnam. Thailand is losing when the currency is not in line with their main competitors (i could also mention the cost of manpower but this is for another time)

Lets go ahead and look at the cost of manpower since it is relevant to exports and the need for a lower exchange rate. When i was thinking about moving my business to Vietnam the wages there were 1/3rd of what they are here in thailand. i have not checked lately but since the baht has gotten stronger and the minimum wage has been increased here in thailand several times in the last few years i would guess that the wage disparity has increased. This means it is even more important to lower the baht to be competive. I have a customer in thailand that is providing furniture for hotels in Thailand and he is importing most of the furniture from vietnam because of the price. he has brought a couple samples from vietnam to me because the quality sucked so bad he is willing to pay me more to get a good quality item but that is only 2 items out of many that the price to quality ratio makes it worth it to produce in thailand even with import costs taken into account.

[wolfmanjack]

Will a weaker Baht help the economy?

You're a rice buyer, you need 500 ton of rice. A cheaper Baht won't make you buy more, you will just pay cheaper.

Now you're a tourist, you have a budget of $1,000. The more Baht you have for your dollars, the more you will spend, in Baht term of course, but that's what's important for the local economy.

So you may agree that a weaker Baht won't (in the short term) help exports, but it sure will help the local tourist-based economy.

I am in the export business. My two main competitors are Indonesia and Vietnam. In 2003 the average for the baht was 207 IDR and 387 VND. So far in 2009 the average is 330 IDR and 513 VND. The baht has strengthened considerably against these 2 currencies. If they weakened the baht to be competitive with these two currencies again I would have a dramatic increase in business. I know this for a fact because I am still getting inquiries from new customers asking me to compete on price with vietnam and indonesia. They like my quality better but the price difference makes most go for the lower price even when I only take a 10% profit.

What are you exporting?

teak furniture

[Thai at Heart]

Will a weaker Baht help the economy?

You're a rice buyer, you need 500 ton of rice. A cheaper Baht won't make you buy more, you will just pay cheaper.

Now you're a tourist, you have a budget of $1,000. The more Baht you have for your dollars, the more you will spend, in Baht term of course, but that's what's important for the local economy.

So you may agree that a weaker Baht won't (in the short term) help exports, but it sure will help the local tourist-based economy.

I am in the export business. My two main competitors are Indonesia and Vietnam. In 2003 the average for the baht was 207 IDR and 387 VND. So far in 2009 the average is 330 IDR and 513 VND. The baht has strengthened considerably against these 2 currencies. If they weakened the baht to be competitive with these two currencies again I would have a dramatic increase in business. I know this for a fact because I am still getting inquiries from new customers asking me to compete on price with vietnam and indonesia. They like my quality better but the price difference makes most go for the lower price even when I only take a 10% profit.

What are you exporting?

teak furniture

Very difficult market.