Help for baht-hit exporters on way
Government and business leaders will meet on Friday to discuss ways to help exporters who are being hurt by the rapid appreciation of the baht, says Commerce Minister Boonsong Teriyapirom.
- Published: 20/04/2013 at 03:10 PM
- Newspaper section: topstories
"We want to listen to the needs of the private sector so we can provide assistance and work with them more easily," Mr Boonsong said on Saturday.
The meeting on Friday will involve the Joint Standing Committee on Commerce, Industry and Banking, which comprises the Thai Chamber of Commerce, the Federation of Thai Industries and the Thai Bankers' Association.
Export figures for March are scheduled to be released this week and many observers believe they will reflect growing impact from the strong baht.
The US dollar value of Thailand's exports in February declined by 5.7% from the same month a year earlier.
The Commerce Ministry earlier set a target of 8-9% growth in the value of exports for this year, but that target could be in jeopardy.
Central bank chief Prasarn (left) says the baht has risen "beyond fundamentals" but he plans no extraordinary responses, which has upset Finance Minister Kittiratt (right).
Prime Minister Yingluck Shinawatra had asked the ministry to fine-tune plans to stimulate exports in the second half of 2013, Mr Boonsong said.
The baht has gained 6.7% against the US dollar this year, making it the best performer among 11 major Asian currencies. It was trading on Friday around 28.60, the highest since shortly after the currency was floated in mid-1997.
Bank of Thailand governor Prasarn Trairatvorakul has said that the baht has started to move beyond its fundamentals.
However, the central bank has declined to cut its benchmark interest rate, currently 2.75%, and is facing increasing heat from Deputy Prime Minister Kittiratt Na-Ranong to do so.
The high local interest rate relative to other countries is attracting heavy inflows of funds from overseas investors into Thai bonds and stocks, increasing demand for the baht.
Mr Kittiratt, who is also the finance minister, says lower interest rates would reduce demand for the baht and push the exchange rate back to more realistic levels, helping exporters.
Dr Prasarn has maintained that the central bank does not plan any extraordinary interventions in the currency market.
"The agenda of the meeting with the prime minister and the government's economic team on Thursday was not about the baht's value. We discussed gold prices and export figures," he said.
Local gold shops were overwhelmed by would-be buyers last week after world prices plunged 10% while Thai markets were closed for the long Songkran holiday.
Prices plummeted on news that cash-strapped Cyprus would sell 10 tonnes of gold from its reserves, leading investors to speculate that some other European countries might follow suit.
Local gold prices tumbled 2,400 baht per baht-weight (15.16 grammes) to below 19,000 baht on Wednesday when shops reopened. Banks in Yaowarat struggled to keep ATMs stocked with cash as consumers flocked to Bangkok's Chinatown to buy gold.
A customer prepares to hand over cash for a gold chain at a Yaowarat gold shop on Thursday. (Reuters photo)
The renowned gold trading company Hua Seng Heng announced on Saturday that one baht-weight gold ornaments were out of stock in five of its branches.
Thanarat Possawong, managing director of Hua Seng Heng Gold Futures, said the company was unable to melt and cast gold quickly enough to meet demand.
"Gold bars also are selling well even though gold prices are starting to increase a little," Mr Thanarat said.
Chaichana Prapruetthipong, chairman of the Nakhon Ratchasima Gold Traders' Association, said 106 gold shops in the province reported a 70% increase in sales, with daily circulation of about 600 million baht.
He said that about 40% of the buyers were purchasing between 10 and 50 baht-weight of gold bars each.
However, many gold shops are likely to face huge losses by the end of this month as most customers may decide not to buy back gold they had pledged earlier since new gold products are cheaper.
World commodity markets are expected to remain volatile in the months ahead as global economic conditions are very uneven, the International Monetary Fund has warned.
IMF managing director Christine Lagarde on Thursday expressed concern over the "three-speed recovery" in the world's largest economies as the IMF and the World Bank opened their spring meetings.
She said the global economy was at a "critical moment" that required well-calibrated "customised" responses by different economies -- stagnating Europe and Japan, the sluggish United States, and quicker-moving emerging economies -- to get back in sync with each other and strengthen global growth.
She said the three groups of countries were moving at distinctly different speeds and this "is not the healthiest recovery that we could think of".
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