Businesses are increasingly fed up with expensive baht

The business community is stepping up pressure on the government to solve the problem of the overvaluation of the baht. Not only the exporters are duped, but also the domestic suppliers.

Many manufacturers have started to import cheaper raw materials and parts from abroad, taking advantage of the favorable exchange rate for them. The domestic suppliers are therefore left behind.

Payungsak Chartsuthipol, chairman of the Federation of Thai Industries, tried it yesterday with Prime Minister Yingluck (photo) after unsuccessfully pleading for measures over the past four months. He called for swift action to curb the baht and an integrated solution by both monetary [read Bank of Thailand] and fiscal policy makers [read Ministry of Finance].

Payungsak warned that the ongoing conflicts could lead to the collapse of Thailand's supply chain and domestic industry, referring to the feud between the Bank of Thailand on the one hand, which shy away from the so-called policy rate and the Ministry of Finance, which insists on this. Minister Kittiratt Na-Ranong (Finance) has publicly advocated for it numerous times and has even said that he would rather lose the governor of the central bank than be rich.

"The fluctuation of the baht, the appreciation and the speculation present not only affect small and medium-sized businesses, but also the supply chain and medium and large industries," said Payungsak. “The FTI does not want the government to devalue the baht, but we want the baht to be more relative to the currencies of our competitors in the region, and we want a more stable exchange rate. We are very concerned that the strong baht in QXNUMX and QXNUMX will continue to affect exports as exporters are now without orders.”

Payungsak expects that exports will not increase by 8 to 9 percent this year, as predicted, but by 4 to 5 percent. To prevent this, according to the FTI, it is necessary that the policy rate, which is now 2,75 percent, will be reduced by 1 percentage point, which will lower interest rates. The Ministry of Finance and the Bank of Thailand should also take additional measures to curb the inflow of foreign capital, which is blamed for the appreciation of the baht.

Since the beginning of this year, the baht is up 6 percent; the Malaysian currency, on the other hand, with only 0,27 percent and the Indonesian currency with 0,69 percent. The Japanese yen is down 15 percent, the Vietnamese dong 0,7 percent and the Korean won 5 percent. The Chinese currency has remained stable. Foreign capital is expected to continue to flow into the country for the next two to three months as the European Union is likely to take measures to stimulate the economy.

(Source: website bangkok mail, May 3, 2013)