Govt should rein in baht, exporters say

They believe it is very important for the government to maintain a weaker and more stable currency in order to ensure Thailand's economic growth amid the global economic downturn and weak demand. The export sector is the Kingdom's key economic driver.

The comments came after some economic experts suggested the government not try to weaken the baht, saying exporters did not trade solely in US dollars but used other currencies too. Sukij Kongpiyacharn, managing director of garment firm Hong Seng Knitting, said traders wanted the baht to be stable against the dollar.

He said exporters relied mostly on trading in dollars rather than other currencies like the baht, euro or yen.

The government should ensure a more stable baht, he said, because the currency had appreciated almost Bt2 in recent months, from 36.20 to the dollar in March to 34.40 last Friday. Sukij said the ideal rate for ensuring export growth was 35-36 against the greenback.

Narong Seafood deputy managing director Arthon Piboonthanapatana said that most foreign importers preferred trading in dollars regardless of exchange-rate instability.

He said more than 80 per cent of traders in the food industry preferred trading in dollars but the baht's strengthening in recent months had made it more difficult for exporters to win contracts.

The baht's appreciation has raised per-unit prices. Exporters must lower their margins to maintain competitiveness. Foreign buyers can easily switch to other countries for their goods if the baht becomes too strong, said Arthon.

Wanlop Pichpongsa, deputy managing director of Capital Cereal, Thailand's largest rice-exporter, said the baht's strengthening had continued to destroy Thai exporters' competitiveness.

"Although the market price for rice has not changed, Thailand's price has increased slightly, due to the baht's appreciation. This has created difficulty for exporters, because other countries' prices, particularly Vietnam's, are now much lower," he said. Despite exporting worldwide, Wanlop said dollars accounted for 99 per cent of his company's total trading value.

Paphavee Suthavivat, managing director of Swift, the Kingdom's leading exporter of fresh fruits and vegetables, said exporters could not shoulder their losses from the stronger baht by buying into hedge funds.