Business operators are preparing to hold talks with the Finance Ministry and the Bank of Thailand about the strong baht, as the surging currency is estimated to have cost exporters 200-300 billion baht.
The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) held its monthly meeting yesterday to monitor the economy. Kalin Sarasin, chairman of the Thai Chamber of Commerce, said the baht has gained 7-8% versus the US dollar, the highest appreciation in Asia this year.
"The business sector is requesting the government set up a new ad hoc committee, gathering officials from the Finance Ministry, Bank of Thailand and JSCCIB to solve the strong baht issue," he said. "This appreciation is pressuring the country's export sector and the JSCCIB wants the government to take quick action to solve this problem, as exporters are suffering."
Thailand relies on massive revenue from the export sector, accounting for 70% of the country's GDP.
Supant Mongkolsuthree, chairman of the Federation of Thai Industries (FTI), said the baht's appreciation is becoming a key factor in cutting GDP growth.
"We expect to meet officials next week for the discussion with the hope of establishing a new ad hoc team," Mr Supant said. "The committee should outline mid- and long-term measures to fix the strong baht to help exporters."
He said the baht has gained for the past several years, but Thailand has a current account surplus and high international reserves.
The Monetary Policy Committee (MPC) voted yesterday to cut the policy interest rate to match a record low of 1.25%.
Mr Supant said the latest cut would do little to help the export sector because the country already has the strongest-gaining currency.
"The practical level for exporters should be 32 baht versus the US dollar," he said. "But the exchange rate is now at 30.19 baht."
He said the business sector is confident that the government will not introduce a fixed currency rate, as such a move would affect the commercial banking sector and overall economic movements.
Suchart Chantaranakaracha, the FTI's vice-chairman for labour affairs, said many export companies have suffered huge losses from the baht's appreciation.
"This problem is having a larger impact than the trade war sentiment," he said.
In October, JSCCIB downgraded Thailand's GDP growth outlook for 2019 a third time to 2.7-3% and cut the export projection to a 0-2% contraction amid the US-China trade war, Brexit woes and the baht's appreciation.
The JSCCIB's previous projection for GDP growth was 2.9-3.3%, with shipments ranging from a 1% contraction to 1% growth. But the private sector is maintaining its inflation projection for the year at 0.8-1.2%.
Mr Suchart said the trade war is expected to continue with widespread effects in 2020.
"Overseas buyers are declining new purchasing orders from Thailand because of the bearish global economy, driven by the trade war," he said. "The next negative impacts are to suspend some operations, reduce overtime payments and cut their workforce to handle current utilisation rates and purchasing orders."