BANGKOK, Thailand – The swift appreciation of the Thai baht, which strengthened from 36 to below 33 baht per U.S. dollar, has raised concerns over its potential impact on Thailand’s export sector, particularly in agriculture.
This more than 10% rise could hurt the country’s competitiveness, especially in the rice industry, where Thai rice is facing growing pressure from Vietnamese competitors.
Dr. Thanavath Phonvichai, President of the University of the Thai Chamber of Commerce (UTCC), expressed his concerns about the situation. He noted that while the Vietnamese dong has appreciated by only 3%, the Thai baht’s rise of 10-11% has placed Thai rice exporters at a significant disadvantage. Vietnamese rice, which already enjoys a price advantage of around 50 baht per ton, now poses an even greater challenge.
Thailand, once the world’s leading rice exporter, has now fallen to third place, trailing behind India and Vietnam. This threatens the income of rice farmers in over 60 provinces, potentially weakening domestic purchasing power.
The private sector is also worried that if the baht continues to appreciate, it could slow down exports further, forcing domestic producers to lower their prices to stay competitive in global markets. Dr. Thanavath has called on the Bank of Thailand to stabilize the currency, suggesting a target exchange rate of around 34 baht per U.S. dollar to maintain Thailand’s competitive edge.
Despite these challenges, Dr. Thanavath forecasts export growth of 2-2.5% this year, supported by existing orders. However, he warned that a stronger baht could reduce capital flow within the country, as export earnings converted into Thai baht will be lower.
On the subject of interest rate cuts, Dr. Thanavath pointed out that reducing rates could improve access to credit, lower bad loans, and reduce business costs. He remains confident in the Monetary Policy Committee’s ability to make sound decisions to address these economic challenges. (NNT)
