Export jitters as Thai baht hits 13-year high

BANGKOK (AFP) -- The Thai baht smashed a 13-year record against the US dollar on Thursday as the country's prime minister predicted continuing strength for the currency, while fears over the impact on exports persist.

The unit surged to 30.85 against the dollar -- its best since August 1997 -- as premier Abhisit Vejjajiva said further advances were not "beyond expectation".

"I cannot say that it will reach 29 baht but it's likely to get stronger," he said, adding that the Bank of Thailand was now closely watching the inflows of funds thought to be helping drive the baht's strength.

Thiti Tantikulanan, head of capital markets at Kasikorn Bank, confirmed the record had been reached early Thursday.

Thailand, in line with other regional neighbours, has seen its currency soar as robust economic growth and rising interest rates attract investors.

The baht has risen 7 percent this year so far, while the Malaysian ringgit is up 9 percent and currencies in Indonesia, the Philippines and Singapore have seen a 4.5 percent increase, Thiti said.

He said around 2.5 billion dollars have flooded into Thai markets, while a positive balance in trade driven by strong exports and a weaker dollar -- as the US recovery appears to falter -- have also helped boost the currency.

Early this month Thailand ordered the central bank to monitor the baht and "prepare measures", while governor Tarisa Watanagase said the appreciation matched other regional economies and more action was not currently needed.

But the strengthening currency has raised some concerns for exporters, who are under pressure to remain competitive.

Federation of Thai Industries chairman Payungsak Chartsuthipol expressed concern about the effect on Thai exporters if the currency accelerates past regional neighbours.

"At the moment the Thai baht is strengthening in accordance with other currencies in the region, so I am not worried. But if only the baht gets stronger, we may face some trouble," said Payungsak.

Thanavath Phonvichai, of the University of the Thai Chamber of Commerce economic forecasting centre, warned of 100 billion baht in lost exports and tourism -- or one percent of fourth quarter output -- if the rise went uncontrolled.

-- (c) Copyright AFP 2010-09-09

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Related link: http://baht.thaivisa.com

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Bangkokbank close. 30.51 usd 46.91 gbp 38.76 eur