BANGKOK, 9 September, 2010 – 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.
http://www.ttrweekly.com/site/wp-content/uploads/2010/09/Thai-baht7.jpgUniversity of the Thai Chamber of Commerce’s head of the economic forecasting centre, Thanavath Phonvichai, warned of Bt100 billion in lost exports and tourism – or 1% of fourth quarter output – if the rise went uncontrolled.
Kasikorn Bank head of capital markets, Thiti Tantikulanan, 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% this year so far, while the Malaysian Ringgit is up 9% and currencies in Indonesia, the Philippines and Singapore have seen a 4.5% 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.
Bron: TTR Weekly.
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