Commerce Minister Krirk-krai Jirapaet yesterday held an urgent meeting with Deputy Prime Minister and Finance Minister MR Pridiyathorn Devakula to discuss the implications of the strengthening baht, which reached an eight-year high against the dollar last week.

Krirk-krai said that while the government has yet to come up with any responses to assist the export sector, the Bank of Thailand (BOT) plans to initiate measures to curb speculation on the currency - which has been partly blamed for the rising value of the baht - in the next couple of days.

Pridiyathorn also attributed the rising baht to the inflows from New York due to declining confidence in the US dollar.

"The Bank of Thailand has prepared certain measures which are better than currency intervention. The central bank is likely to announce the measure on 6 December [tomorrow]," he said.

Regarding measures to assist the export sector, Pridiyathorn said, "It's not necessary to take care of exporters at the moment because the central bank will undertake measures to curb speculation. And I never said we will have measures to assist exporters."

The baht, which was trading at about 35.90 to the US dollar yesterday, has gained about 14 per cent on the dollar since the beginning of the year.

Krirk-krai conceded that the stronger baht would cause the value of Kingdom's exports to drop next year. However, he was optimistic it would have a positive effect on the country's economy overall.

Previously, Krirk-krai had said the ministry would try to boost export growth by 15 per cent each year. This year, the ministry aims to see exports rise by 16.5-17.5 per cent to US$128-$130 billion.

The total value of exports reached $107.11 billion (Bt4.10 trillion) in the first 10 months of the year, a rise of 16.8 per cent. An exact export target for next year is to be announced by the ministry some time this week.

Santi Vilassakdanont, chairman of the Federation of Thai Industries, said the country's private sector was concerned about the baht being stronger than other currencies in the region. He said the private sector wants the government to curb speculation on the baht to bring it in line with other Asian currencies. Otherwise, industries such as

textiles and processed agricultural goods would be unable to compete in the world market.

Santi said the rising baht would also deter foreign investors who would be concerned that the currency will swing back.

Pramon Sutivong from the Thai Chamber of Commerce attributed the baht's rise to the fact that financial analysts worldwide have speculated that the US will let the dollar continue to depreciate.

Pramon said he personally thought the appropriate exchange rate for the baht should be Bt36 per dollar.

Jada Wattanasiritham, president and chief executive officer of Siam Commercial Bank, said import and export businesses, particularly those in the textile and agriculture sectors, would likely be most affected by the strengthened baht.

She said the textile industry has been weakened by global competition and would be further hurt by the foreign exchange rate. Also, she said agriculture exports would not be able to compensate for the higher value of imports. However, she believed the BOT would be able to control the baht's volatility.

According to Bangkok Bank president Chartsiri Sophonpanich, the central bank should be able to manage the baht. Though interest-rate measure is one instrument to manage foreign exchange, the BOT should consider other methods of currency management.

Kasikorn Research Centre said in its research that the baht has continued to strengthen due to continued capital inflows and a positive outlook toward the baht and the Thai economic and political situation. In addition, the baht's gains can also be attributed to the fact that traders are concerned about US economic growth and are bearish on the US dollar in the light of slowing US GDP growth. The Federal Reserve might be prompted to cut the policy interest rate in the year to come, as widely expected.

Given this scenario, the baht will likely strengthen further in the coming year. Kasikorn expects the baht may rise to Bt35 per US$ in the first half of 2007 and may close the year in the range of Bt35-Bt36, against a 2006 year-end value of Bt35.5-Bt36.