ASEAN KEY DESTINATIONS
Thai baht rises more than any currency except yen
Wiwan Tharahirunchote, executive chairman of the Kasikorn Bank research unit, said the baht will keep rising next year in line with the weakening dollar, foreign capital inflows and the country's trade surplus.
The baht has appreciated by 10.3 percent to 29.95 to the dollar for the year to date, the second highest among Asian currencies behind the yen.
"It is possible to see the baht touch 25 baht to the dollar, but it will probably take a year or two. Exporters should set their prices to offset a currency gain of 10 percent from the actual exchange rate," said Mrs Wiwan.
KBank forecasts Thai GDP growth between 3.5 percent and 4.5 percent next year as the world recovery is still wobbly, meaning exports will grow only 9-10 per cent after this year's 24.5 per cent expansion. In 2011, it predicts the trade surplus will fall to between $4.5 and $7.6 billion, below this year's $10 billion, while the trade account balance is estimated at $5.5 billion to 8.6 billion from this year's $9.8 billion.
Foreign investment is expected to grow by 7.5 per cent to 9 per cent next year, down from 10.2 per cent. Inflation is expected to expand to 2.5 per cent to 4 per cent next year following this year's estimate of 3.4 per cent, which may rise to 3.5 per cent due to the floods.
Core inflation this year is predicted to rest at 0.9 per cent, increasing to between 1.8 per cent and 3 per cent next year.
"In 2011, inflation will likely expand as the country copes with floods and rising food prices, but this is not cause to worry as interest rates should also rise," said Mrs. Wiwan.
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