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Strong baht to deliver Bt66 bn hit


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Strong baht to deliver Bt66 bn hit 

By   The Nation 

 

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 THE strengthening baht could wipe as much as Bt66 billion off the value of Thailand’s exports this year, research shows.

 

After a rocky start to the year, the outlook for exporters is set to worsen, according to the research unit of TMB Bank, which points to the monetary easing of central banks in major economies – including the United States, Europe and Japan – that could push the baht to a further 5 per cent gain by the end of this year.

 

TMB Analytics said exports - excluding gold and weapons - contracted by 4 per cent year on year in the first four months of this year. For the rest of the year, exporters face heightened risks and fluctuation in value in light of uncertainties from the trade sparring between the US and its major trading partner countries, notably in Europe and China.

 

The baht is projected to stay at 31.2 to the US dollar until the end of this year, up 5 per cent from last year.

 

The expected baht appreciation of 5 per cent could cut companies’ profits by about Bt17 billion.

 

Those business sectors that rely on export income and use local materials will suffer the worst impacts, with an estimated income loss of Bt66 billion and a projected gross profit margin drop of 0.3-3.2 per cent. This group includes producers of rubber products, seafood, meat and accessories.

 

Expected to benefit from the situation are those businesses that distribute products locally and import raw materials. They will gain from an estimated reduction in imported materials of Bt62 billion, and an increase of 0.3-4.9 per cent in gross profit margins. This group includes producers of machinery and parts, steel and other metals, electrical appliances, textiles, and medical products and equipment.

 

Those reliant on export income and import raw materials will not experience impacts, due to the effect of a natural hedge. This group includes producers of auto parts, beverages and chemical products.

 

Businesses engaged in agriculture that rely mainly on exports and use local materials have been pressured by the baht’s appreciation, as well as from existing problems including low prices, high competition and sluggish global markets, said Jitipol Puksamatanan, a strategist at Krungthai Bank.

 

If the baht continued its appreciation several business sectors - particularly small and medium-sized enterprises (SMEs) - will be affected or, at the worst, shut down their operations, he said.

 

 “If the situation continues, and Thailand still faces a current account surplus, the baht will likely appreciate further. Management must focus on the long term. It’s difficult to [imagine a scenario where we] have a chance to see a baht depreciation. We have to find ways to develop products to compete with others,” he said.

 

Based a survey by The Nation, the baht switched to a sharp appreciation after the US Federal Reserve signalled more monetary easing, which promoted market expectations for two to three possible interest rate cuts this year. 

 

Within the region, the baht hit its highest level in more than 25 years against the Malaysian and Indonesian currencies. It was trading at 7.50 to the ringgit, marking a gain of 42.3 per cent from its previous high of 12.99 per ringgit. At 2.19 to Indonesia’s rupiah, it is up 82.6 per cent from its prior high of 12.60.

 

Against the Indian rupee, the baht was trading at its highest in 21 years and seven months, at 0.45 to the rupee. This represents a jump of 62.5 per cent from its last high at 1.40 to the rupee.

 

 The baht has appreciated against Vietnam’s dong by the most in 20 years and four months, at 0.0013 per dong. This is up 99.9 per cent from its last high at 2.71 per dong.

 

Against the Philippine peso, the baht is at its strongest in 20 years, rising to 0.6 per peso, up 40.6 per cent from its last high at 1.01 per peso.

 

Farther afield, the Thai currency has appreciated against the British pound by the most in 22 years and four months, at 39.7 to the pound. This is up 56.2 per cent from its last high at 90.72 to the pound.

 

 Against the Australian dollar, the baht has gained the most 18 years and six months to 21.70, up 41.2 per cent from its last high at 36.90 to that unit.

 

Source: http://www.nationmultimedia.com/detail/breakingnews/30371051

 

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I believe it's because the thai economy just continues to tick over moderately whether it be during a GFC or oil embargo or trade war, it just doesn't seem to affect Thailand as much like it does the US or Australia or the UK.

Has Thailand been in a recession lately or even close ?

Has GPD really ever suffered badly ?

Thailand also relies heavily on a strong domestic market which also appears moderate to strong and never faltering or crashing like other countries.

Thailand also relies heavily on tourism and the tourist dollar .... which also never seems to crash or falter.

 

I am not saying this is all correct but if you have the answer please let me know because it's the best scenario I can come up with.

 

 

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Well, it certainly benefits a very small but very, very "influential" group within society, who have financial, property, educational and investment interests overseas, which are funded from business within Thailand.

 

May just be a happy coincidence of course...

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43 minutes ago, steven100 said:

I believe it's because the thai economy just continues to tick over moderately whether it be during a GFC or oil embargo or trade war, it just doesn't seem to affect Thailand as much like it does the US or Australia or the UK.

Has Thailand been in a recession lately or even close ?

Has GPD really ever suffered badly ?

Thailand also relies heavily on a strong domestic market which also appears moderate to strong and never faltering or crashing like other countries.

Thailand also relies heavily on tourism and the tourist dollar .... which also never seems to crash or falter.

 

I am not saying this is all correct but if you have the answer please let me know because it's the best scenario I can come up with.

 

 

A high baht buys more US dollars for the corrupt officials with offshore accounts! Why would they want to lower the baht?

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As an export based economy the high Baht must be affecting investment decisions being made by larger companies. The higher Baht makes labour, infrastructure and transport relatively more expensive than other locations.

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1 hour ago, steven100 said:

I believe it's because the thai economy just continues to tick over moderately whether it be during a GFC or oil embargo or trade war, it just doesn't seem to affect Thailand as much like it does the US or Australia or the UK.

Has Thailand been in a recession lately or even close ?

Has GPD really ever suffered badly ?

Thailand also relies heavily on a strong domestic market which also appears moderate to strong and never faltering or crashing like other countries.

Thailand also relies heavily on tourism and the tourist dollar .... which also never seems to crash or falter.

 

I am not saying this is all correct but if you have the answer please let me know because it's the best scenario I can come up with.

 

 

Yea, I stopped reading after "I believe".

 

There are many reports in the news of late that the economy isn't doing well. Add to that that we have a 'new' government who are the same as the old one, who are secretive and seemingly not held accountable for the things they do, and you have yourself a very worrying situation. 

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Didn't the US recently state Thailand not to be manipulating the financial market place?

 

Considering factors such as trade wars, poor world economy, embargoes etc... I find it hard to comprehend how a Third World country should have such a strong monetary currency?

 

Hmmm. I wonder why...

 

What does Thailand offer to the rest of the world, apart from the obvious illigal activities which can easily be sought in places such as Pattaya Bangkok plus Phuket.

 

 

 

 

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4 hours ago, webfact said:

TMB Analytics said exports - excluding gold and weapons -

 

4 hours ago, webfact said:

We have to find ways to develop products to compete with others,” he said.

Gold plated slingshots?

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9 minutes ago, Sonhia said:

I find it hard to comprehend how a Third World country should have such a strong monetary currency?

because they will never let the events of 1997 happen again. A farang (the evil filth George Soros) collapsed the Bank of Thailand and destroyed their economy.

 

After 1997 the world bank made suggestions to prevent a repeat. and they followed them. huge surplus of cash now. 

 

Ironically the USA and others did not follow their own advice.

 

Thailand is booming.  

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want to get really freaked out?

 

" The Morgan Stanley Business Conditions Index fell by 32 points in June, to a level of 13 from a level of 45 in May. This drop is the largest one-month decline on record."

 

https://www.cnbc.com/2019/06/13/a-morgan-stanley-reading-on-the-economy-collapses-by-the-most-ever.html

 

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44 minutes ago, rkidlad said:

Yea, I stopped reading after "I believe".

 

There are many reports in the news of late that the economy isn't doing well. Add to that that we have a 'new' government who are the same as the old one, who are secretive and seemingly not held accountable for the things they do, and you have yourself a very worrying situation. 

That's great .... please refrain from reading any further posts.  :)  lol

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10 minutes ago, steven100 said:

That's great .... please refrain from reading any further posts.  🙂 lol

Oh no, Steven. I shall continue to scrutinise and mock your ideas when they're bad. You're welcome to do the same back to me. It's called being an adult. People should always be free to talk and ask questions. Ideas should always be out in the open ready to be exposed if they're bad. After all, sunlight is the best disinfectant. 

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34 minutes ago, Kasane said:

Good to keep 800K baht in Thai bank account. Appreciating baht can fund a vacation to Western countries!!

I sometimes soothe myself by thinking of accounts here and in USA as a teeter totter: one goes down means other goes up...

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2 hours ago, JAG said:

Well, it certainly benefits a very small but very, very "influential" group within society, who have financial, property, educational and investment interests overseas, which are funded from business within Thailand.

 

May just be a happy coincidence of course...

Are you suggesting that "a very small but very, very "influential" group" is manipulating the value of the Thai baht? How?

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3 hours ago, fforest1 said:

Damm good question....

Pretty easy really, major economies are on their way to devaluing their own currencies, both the Fed and the ECB are openly talking of rate cuts, the trade war is also hurting the US, EU and Chinese economies more than the Thai economy and Thailand has a huge current account surplus, teflon Thailand.

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13 minutes ago, Ozman52 said:

Are you suggesting that "a very small but very, very "influential" group" is manipulating the value of the Thai baht? How?

The same way they manipulate the populace here - illegally. 

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15 hours ago, rkidlad said:

Oh no, Steven. I shall continue to scrutinise and mock your ideas when they're bad. You're welcome to do the same back to me. It's called being an adult. People should always be free to talk and ask questions. Ideas should always be out in the open ready to be exposed if they're bad. After all, sunlight is the best disinfectant. 

Unless you went to school in Thailand!

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how can the baht be so strong when the govt has emptied to coffers and is in steep debt, any other country would see their currency dropping not getting stronger, really looks like it is being manipulated especially with the election just gone. 

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1 hour ago, Ulic said:

Exports less competitive but imports cheaper. 

But only for the Thai importers.  You and I, and the locals, never have nor never will enjoy lower imported goods prices, especially on vehicles and consumer electronics, thanks to Thailand's heinous monopoly import/distribution system.

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Despite warnings from the U.S. Treasury and being placed on a watch list of countries who seem to be manipulating their currencies the Bank of Thailand continues to keep the Baht strong. So what if it hurts most of the Thai people in some fashion?? This huge hit to the Thai exports is not small potatoes and it will have a severe impact in the long run unless something is done. But this being Thailand where the big money people have the final say so the Baht will continue to be kept strong to keep their wealth from dimishing and to hell with anyone else. Let's hope the U.S. Treasury Department keeps their word and declares Thailand a currency manipulator, then and only then will the Bank of Thailand sit up and take notice and put the Baht where it rightfully should be and that's at the 33 to 34 baht to the U.S. dollar.

Sent from my CMR-AL19 using Thailand Forum - Thaivisa mobile app

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2 hours ago, Ozman52 said:

Are you suggesting that "a very small but very, very "influential" group" is manipulating the value of the Thai baht? How?

The government is very much beholden, in many ways to such "influences".

 

As to "how?", I don't know. As I said it may just be a happy coincidence.

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