Thai exporters and business leaders yesterday urged policymakers to take steps to stem the baht's appreciation in order to help protect the country's price competitiveness.
But Finance Minister Kittiratt Na-Ranong played down the impact of the stronger currency on the overall economy and instead urged businesses to accelerate investment abroad.
The baht yesterday was quoted at 29.84/29.87 to the US dollar compared with 29.99/30.01 on Tuesday.
The unit is trading at a 16-month high thanks to inflows into the bond and stock markets and is up by nearly 5% from last January.
Mr Kittiratt said the dollar weakness stems from the US Federal Reserve's quantitative easing programme injecting liquidity in the system, resulting in the dollar depreciating against other currencies including the baht.
"We should not forget there is also a positive side to the stronger baht, as our imported oil costs will decline as well," he said.
"As oil is a major component in living costs and inflation, the domestic market overall will also improve
[with cheaper energy costs]."
Consumer prices rose by 3.63% year-on-year last month, the highest rate of gain since November 2011.
Bank of Thailand governor Prasarn Trairatvorakul on Monday ruled out intervention in the currency markets, saying the baht is moving in line with regional currencies and being driven by fund flows into the region.
But business leaders expressed mixed views about the stronger currency.
Korbsook Iamsuri, president of the Thai Rice Exporters Association, said the stronger baht will definitely put pressure on Thai exporters, as Thai rice will lose price competitiveness relative to other competing countries.
But he said the impact will depend on the extent of the gains in the coming months.
"How much rice shipments decline should become clearer over the next two or three months," said Ms Korbsook.
Srirat Rastapana, director-general of the International Trade Promotion Department, also expressed concern about the stronger currency.
The department, under the Commerce Ministry, will monitor currency trends closely and the effect on Thai exporters, she said, adding that the central bank should "give close care" to the issue.
Exports last November totalled US$19.3 billion, up by 27.1% year-on-year, due to low base effects as a result of the 2011 floods.
November shipments compared with exports of $19.1 billion in October and $20.4 billion in September.
Somphob Manarungsan, an economist and rector of the Panyapiwat Institute of Technology, said the stronger baht will affect not only commodities exporters but also manufacturers in labour-intensive sectors such as garments and textiles as well as industries such as electrical appliances.
"Exporters need to adjust their business strategy to cope with the baht's strength. The baht may continue to appreciate, as fund flows will likely continue to be positive into Asean, particularly Thailand," said Mr Somphob.
But Olarn Chaipravat, chairman of the Thai Trade Representative Office, said he does not believe the appreciation will make a significant impact on exports this year.
Mr Olarn, also an economic adviser to Prime Minister Yingluck Shinawatra, said there is no need for the central bank to consider measures against capital inflows at present.
Sarasin Viraphol, an executive vice-president of agribusiness giant the Charoen Pokphand Group, said exporters should take advantage of the stronger baht by stepping up imports of raw materials to reduce production costs.
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Writer: Phusadee Arunmas & Wichit Chantanusornsiri