BEHIND THE NUMBERS
Political pressure on the Monetary Policy Committee (MPC) mounted as the baht shot to a 16-year high last month, inching close to 28.50 to the US dollar. Word spread that the Bank of Thailand and the Finance Ministry were ready to impose measures to curb hot money after a much-hyped meeting with the National Economic and Social Development Board last Friday.
In the end, it was all talk and no action. No measures were announced, but the market's fear of action, particularly after the next MPC meeting on May 29, has since kept the baht in check, and it is now hovering between 29.30 and 29.40, a far more reasonable level.
As a rule, a strong baht hurts Thai exporters, but the impact is not equal across all industries. A study by Bank of Thailand staff found agricultural exports are the most sensitive to exchange-rate movements. On average, their value falls by 0.36% for every percentage increase in value of the baht. Labour-intensive manufacturing trails agriculture with a 0.23% value loss.
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