Weak baht may be little help to exports

Economy September 30, 2015 14:29

By Petchanet Pratruangkrai,
Such

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THE WEAKENING of the baht will not help Thailand's export sector much, as other countries have seen their currencies depreciate as well, private-sector representatives said.



The baht had weakened to 36.55 against the US dollar by 5pm yesterday, from 36.29 on Monday evening. 
Pornsilp Patchrintanakul, adviser to the Board of Trade of Thailand, said the continuing depreciation of the baht should help drive exports in some sectors, particularly farm goods and agro-industry products that rely on local content for their production. However, other industries that rely on some imported content will not benefit as much as import costs will be higher.
Pornsilp expects that with uncertain global economic growth, Thai exports will face negative growth this year and into 2016 despite the weak baht as other currencies have also weakened.
Nopporn Thepsithar, chairman of the Thai National Shippers Council, said the depreciation of the baht to almost 37 against the dollar would create more profit for exporters, but it would not help export growth as long as the outlook for the global economy remained gloomy.
“Thai goods may be more competitive, but as other currencies have also depreciated, orders for Thai products will not increase significantly,” he said.
The TNSC expects that exports this year will contract in value by about 4.7 per cent.
Predee Daochai, president of Kasikornbank, said: “The continuous depreciation of the baht will definitely help support exports. However, we have to look at the currencies of neighbouring countries as well. If those currencies get weaker than Thailand’s, Thailand’s exports might not benefit much.”
Amonthep Chawla, head of research at CIMB Thai Bank, said the weaker baht was in line with the region as markets had expressed concern over the US Federal Reserve’s intention to raise interest rates eventually.
“We need to monitor whether the weaker baht will support consumption and investment in the country,” he said.
Thailand on Monday announced August export data, posting a year-on-year decline by 6.7 per cent on low commodity prices and weak external demand.  This put pressure on the Thai baht, which has been weakening also because of expected capital outflows from emerging markets.
United Overseas Bank Group’s Global Economics and Markets Research reported that Thailand’s trade data continued to weaken in August, with exports falling by 6.7 per cent from the same month last year, marking the eighth consecutive monthly contraction. 
From January to August, the cumulative export value contracted by 4.9 per cent. Key reasons remain the slowdown in external demand and low oil prices in the global market. 
The impact of the slowdown of the Chinese economy rippled across other Asian economies as well as other commodity exporters, and thus caused demand by Thailand’s trading partners to plummet. At the same time, Thailand’s export prices for oil-related products declined with falling oil prices, while some other merchandise saw price reductions to trading partners due to weaker bargaining power. 
However, the Commerce Ministry maintained its full-year export-growth forecast at negative-3.0 per cent.