Exporters are crying foul over the rising baht which has eroded their price competitiveness as the currency this week continued hovering around Bt38 a dollar with the possibility of strengthening further.

 "I almost fainted after I saw the baht rise early this week," said Poj Aramwatananond, president of Thai Frozen Foods Association. He added that Finance Minister Thanong Bidaya had assured exporters that the baht should be no stronger than Bt38 a dollar, but it shot below the Bt38-level on Tuesday despite his pronouncement.

"Exporters have already made some adjustments by setting prices based on the rate of Bt38 per dollar. But recently the baht has been fluctuating wildly. We don't know what else we can do to cope with the situation," Poj said. "Processed agricultural food producers will be in a difficult situation. Initially, export volume should not fall. But it will be difficult for us to increase our export volume when the baht is fluctuating."

The baht opened yesterday at Bt37.95 against the US dollar. After falling to Bt38.20, it climbed to Bt38.10.

"It weakened in tandem with regional currencies. The Japanese yen took the lead in falling yesterday following North Korea's missile launch," said a dealer at a local bank.

When it passed the Bt38 level, the baht hit a one-month high against the greenback. Its recent strengthening was the result of fresh capital inflows apparently to take profits in the floundering stock exchange and the baht-dollar exchange rates. Such inflows sparked concerns from the Bank of Thailand, prompting its governor, Pridiyathorn Devakula, on Tuesday to say that he needed a few days to check where the money came from.

 Prasarn Trairatvorakul, president of Kasikornbank, said as the inflows could be for short-term profit taking, everyone should be wary. "I'm confident that the central bank is closely monitoring the situation," he said.

Sumeth Laomoraphorn, president of CP Intertrade Co Ltd, said all producers should make adjustments by reducing costs and increasing efficiency.

"I disagree with the idea to have the Bank of Thailand intervene in the market because it's unlikely," he said. "The size of our economy is not as big as the US's and China's."

Aat Pisanwanich, director of the Centre for International Trade Studies at the University of the Thai Chamber of Commerce, said that the BOT should closely monitor the baht.

He added that the BOT should not monitor the baht value for a mere two to three days, but for a longer time. The exchange rate should not exceed Bt38-Bt39 against the dollar.

"If the baht strengthens to Bt37 per dollar, export growth will drop to 11 per cent, compared to the government's projection of 13 per cent this year," he said.

Chantra Purnariksha, director-general of the Export Promotion Department, said the exchange rate could not be controlled. The department will focus on strengthening export competitiveness through marketing strategies, trade promotion and logistics development. These efforts can reduce manufacturers' production and transportation costs.

"What we are doing is trying to reduce direct costs to offset the problems exporters face from the strong baht," Chantra said.

Petchanet Pratruangkrai,   Somruedi Banchongduang

The Nation