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Published on July 18, 2007

FTI deputy secretary-general Tanit Sorat said the gap in the exchange rate in the domestic and international markets was nearly Bt3 to the US dollar, which was tempting speculators to purchase more baht. The onshore baht rate was about 33.28 to the dollar, while offshore it was 29.90 yesterday.

He said the baht might appreciate to 30-32 to the dollar in the second half, because of the influx of reserved capital from China and Japan.

The FTI also suggested the Revenue Department change the rules for returning value-added tax to exporters, who were suffering from the strong baht. In addition, it called for the government to allow operators to use foreign assets as collateral against their loans in a bid to encourage them to invest in other countries.

Meanwhile, Sompop Manarangsan, a lecturer from the Economics Faculty of Chulalongkorn University, said the BOT should end the 30-per-cent capital-reserve measure, which would increase circulation of the baht domestically and internationally.

He suggested that commercial banks allow exporters to hold foreign-currency deposits and the interest rates could depend on each currency.

"This will help increasing demand for the US dollar because the interest rate of dollar is a few per cent higher than for the baht," he added.

Chen Namchaisiri, chairman of the FTI's textile industry club, said the government should set up a consulting team to advise small and medium enterprises how to manage their risks and hedge funds.

"Many operators cannot do forward trade because they do not have enough money to pay the fee," he said.

He also asked the government to pay more attention to operators in provincial areas because they suffered not only from the baht's strength but also high logistics costs.

He added the government should turn the crisis into opportunity by accelerating development of infrastructure. Also, exporters should improve their productivity and boost efficiency.

Meanwhile, the central bank yesterday told the public not to trade foreign currencies on the Internet, saying such transactions violate the law which allows only authorised dealers.

The announcement came following the emergence of websites that offer such transactions and questions to the central bank if such transactions were legal.

Chalida Ekvitthayavechnukul

The Nation