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The government and the central bank should use monetary policy to prevent the baht from weakening past 34 per US dollar, he told a seminar on the "Thai Economy During the Global Crisis and the Right Direction for Thai Manufacturers" held by the Industrial Promotion Department.

As the baht slipped to 33.72 per dollar from 31 at the beginning of this year, exporters have gained Bt300 billion to Bt400 billion, based on the Commerce Ministry's export projection of US$171 billion (Bt5.76 trillion) this year.

"Our exports in the first five months grew about 22 per cent on year. Therefore, I think export growth this year should rise over the forecast of 12.5 per cent because growth in the second half is usually higher than in the first half," Sompop said.

On the contrary, the baht's depreciation acted as a drag on the country's import value, particularly the oil price when converted into baht. A Bt1-Bt2 decline in the baht will boost the baht oil price by 7-8 per cent.

Last month's 8.9-per-cent inflation rate was higher than China's 7 per cent.

"It's time for the government to give more importance to imports rather than exports. Otherwise, inflation may spiral up to double digits and the country will face a murky climate of economic slowdown, political turmoil and more crimes," Sompop said.

The central bank is being pressured to push up the interest rate since small banks borrowed more money from it, he said, adding that the Monetary Policy Committee should consider lifting its key interest rate by 25 basis points.

Core inflation should be fixed between zero and 3.5 per cent but it rose to 3.6 per cent in June, so the central bank should adjust its monetary policy to control core inflation by focusing more on headline inflation.

"The government needs to stimulate the country's investment and restore the confidence of industrial operators."