Surging baht adds to Thai challenges

BANGKOK • A surge in the baht is adding to the challenges facing Thailand's trade-dependent economy this year as exports fall.

The baht's climb of about 5 per cent against the dollar in the past six months is the strongest in the world, according to data compiled by Bloomberg.

Exports are already suffering from the US-China trade war and fell last month for the second straight month, Commerce Ministry figures showed yesterday.

Currency strength is a worry and will hurt shipments, the ministry's director-general of trade policy and strategy Pimchanok Vonkorpon said at a briefing after releasing the trade data.

The baht has jumped due to Thailand's US$207 billion (S$281 billion) of foreign reserves, a current-account surplus and dollar weakness sparked partly by the US Federal Reserve's recent dovish tilt.

The currency will continue to be strong this year, said Krung Thai Bank chief strategist Jitipol Puksamatanan.

But ING Groep economist Prakash Sakpal said politics could be a headwind amid uncertainty stemming from the general election due this year after more than four years of military rule.

Exports of goods and services are equivalent to about two-thirds of gross domestic product in South-east Asia's second-largest economy.

Growth in shipments has fizzled since a peak early last year and the back-to-back fall over November and December is the first since 2016.


A version of this article appeared in the print edition of The Straits Times on January 22, 2019, with the headline 'Surging baht adds to Thai challenges'. Print Edition | Subscribe