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Published on March 11, 2008

Siam Commercial Bank executive vice president Veerathai Santipraphop yesterday said foreign-exchange hedging by exporters had risen significantly as a result.

The increase was more noticeable after the People's Power Party (PPP) won the general election. This was because exporters had anticipated a PPP win and that it would revoke the 30-per-cent capital-control measure, as promised in its campaign manifesto.

Many of the bank's small and medium-sized enterprise (SME) customers made arrangements to reduce their foreign-exchange risk. As a result, they have not been affected by the rising baht.

"After the scrapping of the 30-per-cent measure, our exporter customers hedged against foreign-exchange fluctuations by forward purchasing. Importer customers also sought risk protection by purchasing options, although the downside to them is lower.

"This is because importers benefit from a stronger baht while exporters lose out," he said.

As the foreign-exchange risk factor rises, the country's third-largest bank has targeted to keep non-performing loans in the SME sector below 3 per cent this year.

The bank also targeted to increase lending by 20 per cent to 25 per cent this year from Bt212 billion. With this ambitious goal, the bank forecasts that market share will rise 17 per cent this year from 15 per cent in 2007.

Kasikornbank's first executive vice president Songpol Chevapanyaroj said the bank had advised all customers to take steps to protect themselves from foreign-exchange risk.

Somruedi Banchongduang

The Nation