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Published on November 27, 2007

Exporters have shifted into the euro, while importers have increasingly paid for goods and services with the US dollar and the baht, according to last year's data released by the Customs Department.

The behaviour has indicated that exporters and importers have adjusted themselves to the baht's appreciation since last year. The currency has moved in a one-way direction due to a huge amount of short-term speculative capital inflow, particularly in the debt market.

It appreciated against the dollar by 17 per cent last year alone, much higher than other regional currencies, causing the Bank of Thailand to introduce a withholding reserve requirement of 30 per cent in December to rein in speculation.

According to the data, export income in euro in 2006 accounted for 2.8 per cent of overall export income, higher than 2.6 per cent in the previous year. This indicated that exporters have shifted to a currency that has not weakened too much against the baht.

The dollar has depreciated tremendously against currencies around the world because of its twin deficits - fiscal and current account - and the sub-prime crisis.

However, most exporters continue to obtain dollar income: 81.7 per cent of total export income, against 81.6 per cent in 2005.

The dollar remains a key currency for regional trade payment. Thai exporters' dollar income received from Asean accounted for 84.3 per cent in 2006, rising from 83.9 per cent in the previous year.

The dominant role of the greenback, however, has declined, particularly in the Thai export markets of Japan and North America. Exporters' dollar income from Japan accounted for 58.7 per cent in 2006, compared with 59.7 per cent in 2005. Dollar income from the United States, Canada and Mexico accounted for 96 per cent, slightly declining from 96.3 per cent in the previous year. In the European market, export income in dollars accounted for 70.8 per cent, compared with 71.9 per cent in 2005, while the euro played a bigger role with 17.7 per cent - up from 16.2 per cent.

Meanwhile, importers increasingly paid for goods and services with both the dollar and baht, reflecting that they could get advantages from the stronger local unit. The weakening dollar helped them to buy products at cheaper prices.

Payments in dollars accounted for 79.2 per cent of total import expenses in 2006, rising from 78.2 per cent in the previous year. Baht payments also went up, from 4.5 per cent to 4.7 per cent.

Baht payments played a crucial role in important import markets such as Asean, North America, Europe and Japan.

Importers' payments for goods and services in baht accounted for 5.9 per cent in 2006, higher than 5.6 per cent the previous year. The level also rose in Japan with 8.4 per cent, against 7.6 per cent in 2005.

Payments in baht for traders in the US and European countries rose from 2.2 per cent to 2.6 per cent and 6 per cent to 6.9 per cent, respectively.

The Nation