FTI, exporters seek help over currency

The sudden surge in the baht is sending the Federation of Thai Industries scurrying to the Bank of Thailand and exporters to Finance Minister Kittirat Na-Ranong next week to seek help and demand that the galloping currency be reined in.

Vallop Vitanakorn, vice chairman of the FTI, said yesterday that the FTI would gather information from its members today on the latest impacts and brainstorm ways to stem the unit's rise for discussion with central bank governor Prasarn Trairatvorakul next week.

The FTI would also ask the monetary authority what it planned to do to curtail the baht's ascent and if it could seek ways to discourage capital inflows, such as by cutting the policy rate.

The FTI will tell the central bank how to prevent the baht from getting stronger than other regional currencies, or else SMEs would suffer tremendously.

The watchdog also has to make it much easier for SMEs to access currency-hedging products from commercial banks. Some regulations should be relaxed for six months, such as the requirement for SMEs to have a loan of the same size as the amount to be hedged. This makes it difficult for SMEs to defend against currency risks.

The central bank should slap on capital controls if it detects huge inflows. It should take immediate steps to put a lid on the baht when necessary.

The average foreign exchange rate of Bt30.94 last year is acceptable to exporters, so the regulator should try to keep the currency at this level. However, since January the baht has gained 3.95 per cent to Bt29.97 from its average value last year, he added.

Kittirat, also a deputy prime minister, said he would meet with exporters next week to seek ways to cushion the damage to them from the baht's appreciation.

Exporters want to see an easing of the central bank's requirement for them to convert their foreign revenue into the baht within a short period of time. The exporters want to have a longer period to hold onto their forex deposits to reduce their exposure to currency movements.

Penchan Charikasem, executive vice president for corporate finance at PTT Exploration and Production, said PTTEP has bought lot of US dollars during the baht's climb, which could support its plan to invest US$24.671 billion (nearly Bt735 billion) by 2017 both here and abroad.