Minister urges baht to be reined in
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Minister urges baht to be reined in

Finance Minister Apisak Tantivorawong urged the Bank of Thailand to rein in the baht to prevent the local currency from strengthening at the faster pace than the country's trade competitors. (File photo)
Finance Minister Apisak Tantivorawong urged the Bank of Thailand to rein in the baht to prevent the local currency from strengthening at the faster pace than the country's trade competitors. (File photo)

Finance Minister Apisak Tantivorawong urged the Bank of Thailand to rein in the strengthening baht after the currency hit a nine-month high against the greenback.

Dealing with currency fluctuation is the central bank's duty and it must step in if the baht outpaces the country's trade competitors, helping the baht move in line with its nominal effective exchange rate, he said. When the baht strengthens faster than its trade competitors, Thailand's exports lose their competitiveness, Mr Apisak said.

He prefers less volatility in the baht's movements.

The baht on Wednesday rose to 31.47 against the dollar, the strongest level since April 2018, up from 31.50 on Tuesday.

According to Reuters, the baht is the best-performing currency in Asia, with a 3.4% gain year-to-date against the greenback, followed by the Chinese yuan (up 2.4%) and Indonesian rupiah (up 1.8%).

The baht was the only currency among its regional peers that gained, albeit marginally, against the US dollar in 2018, as investors have perceived it as a safe haven because of Thailand's high foreign reserves and current account surplus.

Earlier, Visit Limlurcha, vice-chairman of the Thai National Shippers' Council, said the firmer baht was not helping exports, which have already been affected by the trade war, especially for products Thailand ships to China to be assembled and re-exported to the US, such as electric circuits, electronics and components.

Thailand's merchandise shipments fell for a second straight month in December, dropping the full-year performance for 2018 to 6.7% growth and missing the 8% target set by the government.

Mr Apisak said the effect of the baht's appreciation on electronics and automotive industries is minimal because they also import raw materials, but agricultural goods and sectors using high local content will feel the pinch.

Governor Veerathai Santiprabhob said recently that the central bank had taken several measures, including baht-ringgit direct settlement offered to exporters and outbound investors, to improve currency risk management amid fluctuations.

Chantavarn Sucharitakul, assistant governor for corporate strategy and relations group at the central bank, has said the situation is a good opportunity for businesses to benefit from the stronger baht by importing machinery and equipment to enhance productivity and reduce costs.

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