1 February 2013
AWOL Cha Am
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Baht valuation goes for a ride
hua hin, THAILAND As we go to print, if you’ve got a pocket full of greenbacks or a few quid, or certainly any foreign currency in a bank which you are considering converting to baht, the recommendation at the moment would be ‘hold’. For avid currency watchers the current exchange rate for Thai baht seems overvalued. Some long-term residents amongst us can recall the days when the baht traded in the mid-forties against the US dollar. The baht has appreciated over 30% in the last five to ten years and was trading at 29.95 baht to US dollar in recent days, making it the strongest regional currency. Last week Thai Prime Minister Yingluck Shinawatra convened an urgent meeting with ministers to consider actions to reign in the baht’s strengthening and erratic fluctuations. Members of government have voiced their concerns that the strong baht would hurt Thai exporters as the cost of Thai goods becomes more expensive on the foreign market. Just as the strong baht has a negative impact on some it also has a positive effect for others; Finance Minister Kittiratt Na-Ranong gave examples such as imports of heavy machinery, construction equipment and industrial technology, and highlighted how the government would move ahead with various infrastructure development and flood control projects. He added that this was an opportunity for the private sector to import goods and advanced technologies, and thus being able to raise their efficiency, increase production and cut costs. It is a precarious balancing act to say the least, and one that many Thai businesses won’t be able to take advantage of due to limited capital and cash reserves. In the meantime, keep your quid and pocket your pennies if you’re able to sit this one out for a time. While Thailand seems to lack any motivation to make meaningful policy changes to cap or lower the baht, currency valuation is hardly a wholly domestic matter. Movement in the Forex is likely to keep the baht in check, hopefully bringing the currency back to more realistic levels. By Hua Hin resident and freelance writer William Sparrow (captain.william.sparrow@gmail.com).
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