The Bank of Thailand and the Ministry of Finance are keeping their heads cool amid the uproar over the baht's appreciation. On Thursday, the baht hit another high of 29,09 against the dollar.
There are two explanations for the price increase: the large amount of liquidity produced by the US and the economic problems of the EU and Japan. Another explanation points to the strong Thai economy.
Central Bank Governor Prasarn Trairatvorakul says Monday's rapid rate appreciation was due to a more optimistic view of the Thai economy compared to other economies in East and Southeast Asia. Malaysia is due to hold elections in the middle of this year, Indonesia is running a balance of payments deficit and South Korea appears to be seriously affected by the depreciation of the Japanese yen.
In recent years, foreign ownership in the domestic stock market has increased. Thailand remains more attractive than other countries because its smaller share of foreign ownership offers better opportunities for investors to rotate their portfolios.
The Ministry of Finance says that 'non-market measures' [read: capital restrictions] are not being considered. Analysts say the Thai economy has been underperforming the regional economies due to political wrangling and flooding. The inflow of foreign capital this year is partly the result of a catch-up operation.
Finance Minister Kittiratt Na-Ranong said yesterday at an Economic Outlook CEO forum in Bangkok that the currency needs to be weakened to help exports. 'We want exports to grow faster. That is why the baht must be weaker and interest rates must be lower.' Kittiratt confirmed that short-term measures to curb the price increase are not being taken. The price increase must be contained through existing monetary and fiscal policies.
A few years ago, the international community did not accept Thailand's short-term measures to curb capital inflows. We do not want to give the impression that Thailand is used to this kind of tactics. The government does not want to take any surprise measures.'
(Source: Bangkok Post, March 22, 2013)
For Thailand, the strong Bath is causing export problems. But you don't have to be a financial expert to conclude that it is good for tourism income. If I look at the euro, 5 years ago 2 euros were deducted from your account if you bought something of 100 Bath. At today's exchange rate, the same purchase currently costs 2,65 euros. That is more than 30% more. And that is not even taking into account that prices in Thailand have risen in those 5 years.
It also means that - because of this exchange rate difference - life in Thailand has become at least 30% more expensive for everyone who receives their income in euros. Moreover, austerity measures in the Netherlands have caused income to fall. A loss of income between 30 and 40%, that gets people into trouble.
It is not a nice message for Dutch people in Thailand. And as long as the euro crisis continues, things will not get any better. Let's wish each other strength in tightening our belts.
@Jacques Lots of lamentation from exporters, but in all the coverage I've followed so far the importers are missing. And they spin on it. Today in News from Thailand also a quote from Barclays about the baht / yen exchange rate, which is extremely favorable for Thailand. Also read that the fuel rate on the electricity bill does not have to be increased. I miss attention to those aspects in the newspaper.
I don't want to complain but in 1991 a Singha beer cost 40 bath x 8.5 old Dutch cents is 3 guilders 40 in the pub in Pattaya.
Now 22 years later, singha beer costs 60 bath = 3 guilders 30 in a pub in Pattaya.
The problem for many people is that people have less to spend and therefore say that it is more expensive here in Thailand.
I have been living in Thailand for 17 years now and you can still do more here with 1000 euros than in the Netherlands, unless you want to enjoy other pleasures, but then it is expensive everywhere.
Once again 10.000 was then 850 guilders and now this is 600 guilders.
Sorry to go back to the guilder, but for the people who don't get it, I also want to calculate it in euros. email known to the editor.
Good luck to everyone in cheap Thailand.
The time of the guilder is long gone. When the Euro was introduced, the Euro was
2.20371 guilders. Beforehand, the guilder was therefore about 18 Bht.
The exchange rate at that time would then be for a Euro 39.67 Bht.
In 1991, a Singha beer cost less than Bht25. When the Euro was introduced, the same beer cost around 35/40 Bht. Nowadays you pay between 80 and 100 Bht for a beer in a small pub in Pattaya. Maybe I'm not very good at math, but when I came here 8 years ago the Euro was 52 Bht and now it is 37.
So that's a 19% drop. I'm not complaining, but if you write a comment the numbers have to be a bit correct. If you compare the first rate of the Euro (39.67), the loss is not that big, but you are talking about more than 13 years ago.
And of course the prices have risen considerably. Especially you good luck in cheap Thailand.
J. Jordan.