Strong baht could mar rice exports

The baht's appreciation to below 33 to the US dollar will create problems for exporters, in particularly their competitiveness vis เ vis China and Vietnam, according to the Thai Chamber of Commerce and rice exporters.

Phongsak Assakul, vice chairman of the chamber, said exporters should be expecting a better time this year, provided the baht is not too strong.

"The stronger baht is the only negative factor that could hinder export growth this year," he said.

Thai farm-goods exports should increase sharply this year due to high demand in the world market, while industrial orders have recovered - as evidenced by high demand for more labour to serve growth, he said.

The baht has appreciated by 3.4 per cent against the greenback over the past year, while the Chinese yuan weakened by 4 per cent and the Vietnamese dong depreciated by 8.4 per cent last year. Therefore, the dong's value has weakened 12 per cent in relation to the baht, giving its exporters a much sharper competitive edge.

The Vietnamese government is also planning to depreciate the currency by another 5 per cent this year.

Phongsak said the government should closely monitor the baht's movement and ensure it is not much stronger than its main export rivals.

Korbsuk Iamsuree, president of the Thai Rice Exporters Association, said the stronger baht had eaten into exporters' competitiveness.

"The price gap between Thai and Vietnamese rice will be wider following the appreciation of the baht. This will create difficulty for Thai rice exports competing with Vietnam," she said.

Vietnamese rice is currently quoted at US$100-$150 (Bt3,284-Bt4,926) a tonne lower than Thai rice.

Korbsuk added that the association expects Thailand to export 9 million-9.5 million tonnes of rice this year. However, if the government releases more of its stockpile under government-to-government contracts, the volume could reach 10 million tonnes.

The baht was trading at 32.84 per dollar late yesterday afternoon.