ASEAN KEY DESTINATIONS
Business wants action on baht
The baht was trading yesterday at a 13-year high of 30.82/85 to the US dollar, compared with 33.15 baht in January. The 7.6 percent increase is the highest in the region behind the Malaysian ringgit.
However, the impact is less pronounced in Malaysia because its economy is not as export-dependent as Thailand's, said Mr Payungsak.
"The stronger baht has both positive and negative sides," he said. "While it benefits the industries that have high import content and those needing to pay back loans, exporters face a reduction in competitiveness. Looking after the economy means taking care of every sector.
FTI vice-chairman Thanit Sorat said the Thai baht could reach 29.50 by the end of October if it gains another 1 percent against major currencies per month. This would have a more pronounced negative affect on exporters unless the Bank of Thailand has measures to curb the flow of money coming into the country.
Thailand's interest rates are high compared with those elsewhere in the region, which is encouraging the inflow of money to the country, said Mr Thanit.
He said gross domestic product (GDP) growth this year could be half a percentage point lower than forecast if the baht continues to rise.
Vallop Vitanakorn, vice-chairman of the Thai National Shippers Council, said the central bank should seek cooperation from commercial banks to provide packing-credit loans in both baht and dollars. Currently the loans are provided mostly in baht.
"Whenever the baht reaches 29 baht per dollar, that will be the crisis for the garment sector," said Mr Vallop.
The FTI has proposed six remedies for the export sector, starting with an explicit acknowledgement by the government that rises in export goods prices are reducing exporters' competitiveness against their rivals.
It said the central bank needed to intervene more in the currency market to stabilise the exchange rate so the gains are more in line with those of other regional currencies.
The heavy inflows of funds into Thailand reflect robust economic growth and relatively low valuations of local stocks, Yunyong Thaicharoen, head of the Capital Market Research Institute at the Stock Exchange of Thailand, said.
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