While ruling out the possibility of short-term measures to rein in the strong baht, Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong said the Thai currency should be weakened to help drive exports.
Though the government will not engage in short-term measures, Mr Kittiratt says a weaker baht is needed over the medium term. PAWAT LAOPAISARNTAKSIN
"We want to see exports grow at a higher rate, and to make that happen, the baht should be weaker and interest rates lower," he told the CEO Economic Outlook forum in Bangkok yesterday.
However, Mr Kittiratt said the government will not use short-term measures but rather existing monetary and fiscal policies.
"The short-term measures used by Thailand several years ago to curb capital inflows were not deemed acceptable by the international community. We don't want to create the perception that Thailand is used to such tactics. The government does not want to use a surprise measure," Mr Kittiratt said as he played down calls from business leaders for the government to launch measures to curb short-term capital inflows.
He also brushed aside speculation the exchange rate will hit 27 baht to the US dollar.
"It is impossible that the baht will reach 26 or 27 baht to the dollar, as market forces will play their role to correct the rate. But before that happens, we don't want to see a strong baht hurting employment," he said.
The state's 2-trillion-baht infrastructure investment plan and 350-billion water management scheme will trigger rising capital outflows to help tame baht gains, said Mr Kittiratt.
He pointed out stability of the exchange rate and interest rate are government priorities to ensure the Thai economy grows by 7% per year.
Anurat Khokasai, chief operations and marketing officer at the seafood firm Prantalay Marketing Co, called for urgent action from the government to curb the baht's strength.
Without immediate measures, Thailand's annual food exports of 970 billion baht will be in jeopardy, he said.
Of that total, shrimp exports make up 80 billion baht.
"Exports to Japan have dropped 25% in value due to the weakening yen," said Mr Anurat, adding that a lower shrimp supply due to early mortality syndrome has raised the cost by 40%.
"This is the big issue for the government and the Bank of Thailand. The industry itself does not have a problem competing with others in the region, but we're facing a war of exchange rates," he said.
The baht is now quoted at 29 to the greenback compared with 32 baht last year. It is 37-38 baht against the euro compared with 40 in 2012.
"If the government wants Thai exports to remain competitive, they'll have to intervene in the baht. Otherwise, export value will likely see a drastic impact," said Mr Anurat.
About the author
- Writer: Nareerat Wiriyapong
Position: Business Reporter