Baht’s rally to 9-month high unnerving Thai exporters, companies

Gains in the Thai baht, Asia’s best performer in the past six months, is frustrating exporters and many private companies that are complaining that the strong currency is hurting them.

The private sector is concerned about the “rapid baht strength,” Thai Bankers’ Association President Payong Srivanich said in a briefing in Bangkok Wednesday. The currency, which is on its longest winning streak in nearly six years, is hurting export competitiveness at a time when businesses are already struggling with rising costs from electricity to interest rates, Federation of Thai Industries Chairman Kriengkrai Thiennukul told the same briefing.

Exporters are finding it difficult to fix their selling price with the currency’s faster-than-expected gain in the past month, Suparp Suwanpimolkul, vice chairman of the Thai National Shippers Council said on Tuesday.

The baht has gained 13% against the US dollar since hitting a 16-year low in October. The currency traded 0.3% higher at 33.422 to a dollar at 1:06 p.m. local time. It climbed to a nine-month high on Tuesday.

Apart from dollar weakness that’s shoring up many currencies, the baht is surging on expectations that the return of millions of Chinese tourists would boost Thailand’s coffers. For Kriengkrai, China’s reopening would also mean more of its products coming into the Thai market.

“Thailand will face rising price competition and strong currency won’t benefit Thailand,” Kriengkrai said.

Hot money flows into Thailand are also increasing. Since the start of the year, an estimated 60 billion baht ($1.8 billion) worth of foreign inflows went into bonds due in less than 1-year, Payong said.

Rest assured, the Bank of Thailand is already monitoring the currency’s movement, according to Payong. 

“The central bank is taking care of the baht in line with the market mechanism,” the Thai banking group head said. “We don’t want to see anything against the market mechanism,” Payong said.