The devaluation of the dong by Vietnam’s central bank would have only a minimal impact on Thai exports and it will not lead to any change in government monetary policy, Finance Minister Korn Chatikavanij said on Thursday.
The value of the Vietnam’s currency was reduced from 17,034 dong to the US dollar to 17,961 dong per dollar.
“The devaluation of Vietnam’s currency might have some effect on the competitiveness of Thai exporters, but it is not significant as the quality and export markets of Thai products are different from those of Vietnam,” Mr Korn said.
The minister was confident that the dong's devaluation would not lead to any change in Thai interest rates or foreign exchange policies.
It was a measure by the Bank of Vietnam to curb the outflow of foreign investment. The bank had previously devalued the currency in 2008, and it had no impact on the Thai exchange rate at all, he said.
Federation of Thai Industries (FTI) chairman Santi Vilassakdanont did not agree. He said the Vietnamese devaluation could hurt the export sector, particularly in the products where Vietnam is the main competitor, such as rice.
“Thai exporters could become the losers if they were to ship similar products to the same markets as Vietnam," said Mr Santi.
Foreign investors may also turn to Vietnam instead of Thailand as the cost would be cheaper, he said.
However, University of Thai Chamber of Commerce (UTCC) director Thanawat Polvichai said the devaluation of the Vietnamese currency would not affect agricultural exports since Thailand still had an advantage in the quality of agricultural goods.
"Vietnam is the only country in the region that has devalued its currency. Thailand would be affected if Malaysia, Indonesia or Singapore decides to follow Vietnam," he said.
He said the Thai baht can be expected to strengthen to 32 baht per US dollar before the end of this year.
"The Thai currency could even appreciate to about 31 baht by year's end because the dollar is still weakening under US President Barack Obama's policy to solve the economic problems in his country," Mr Thanawat said.
He said the baht's value in 2010 would likely strengthen by approximately three to five per cent from this year, but it should not reach 30 baht a dollar because the Bank of Thailand would intervene to maintain an appropriate level.
The baht's appreciation was in line with other regional currencies and Thailand could still compete in the global market.
"Rapid appreciation in the baht would cause more economic problems, but if the government imports more machinery and raw materials for its investment projects this would help weaken the baht's value," the UTCC chief said.
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