Thai Chamber urges central bank to move baht closer to other currencies

BANGKOK: -- The Bank of Thailand (BoT) should closely supervise the baht to ensure it does not appreciate considerably and that it moves in the same direction as other currencies in the region, according to the Thai Chamber of Commerce (TCC).

TCC Vice-Chairman Pongsak Assakul said the baht had strengthened against currencies of neighbouring countries by 1.8 per cent since early this year.

The currencies of most neighbours had weakened or strengthened marginally against the baht. For instance, the Malaysian ringgit had depreciated 2.8 per cent and the Singapore dollar had weakened 0.9 per cent.

The baht index showed the currency had appreciated 2.71 per cent against the currencies of 12 of Thailand’s trading partners. This means that Thai exports lost competitiveness in terms of prices by the same percentages.

Nonetheless, should the baht weaken by one per US dollar, exports would grow further and the economy would expand by 0.3 per cent, leading to an increase in the number of new jobs by 100,000 .

“Should the baht management be stable, it will boost investor confidence the baht won’t be attacked because it is closely supervised. The matter will be raised for consideration at the Joint Private-Sector Committee,” Mr. Pongsak said.

-- TNA 2009-06-12

Thai Chamber urges central bank to move baht closer to other currencies

Nonetheless, should the baht weaken by one per US dollar, exports would grow further and the economy would expand by 0.3 per cent, leading to an increase in the number of new jobs by 100,000 .

-- TNA 2009-06-12

So if the baht is weakened by one per US dollar (almost 3% at the current level of 34) then all imported goods especially oil become 3% more expensive. But the economy will only grow by 0.3%.....not really effective is it?

Real industries (and companies) don't live and die by the exchange rate. If Thailand does weaken the currency, expect neighbouring countries o follow suit. Then it's a rather self defeating pointless exercise isn't it?