The private sector's Joint Standing Committee on Commerce, Industry and Banking wants Thai banks to reduce the differential between the buying and selling rates of non-US-dollar currencies.

The aim is to encourage exporters to trade in other currencies and thus reduce their risks from fluctuations in the baht-dollar exchange rate.

The standing committee will seek a meeting with the Thai Bankers' Association to discuss the proposal.

At present, exporters and importers prefer to trade in the dollar, because of the narrow gap between buying and selling rates compared with other currencies, such as the euro or the yen.

The seminar "Baht Appreciation and the Exporting Situation" was told yesterday that exporters would be encouraged to trade in other currencies if banks made the gap between buying and selling rates smaller.

Federation of Thai Industries (FTI) vice chairman Adisak Rohitasune said almost every industry had been affected by the fluctuating baht against the dollar but especially exporters.

Although the Bank of Thailand (BOT) imposed its 30-per-cent withholding requirement to curb the rise of the baht against the dollar, the baht has continued to be unstable because of other factors, including the New Year's Eve bombings in Bangkok, amendments to the Foreign Business Act and political turmoil.

"A person who is able to predict the rate of the baht will certainly become a millionaire," Adisak said. "I can say it's virtually unpredictable, because surprising incidents take place each week."

FTI deputy secretary-general Tanit Sorat said the baht had tended to grow stronger because of the central bank's offshore policy and dollar overflow. Therefore, if Thai operators shifted to other currencies to ease the influx of dollars, that should help stabilise the level of the baht.

He said the FTI also wanted the government to consider implementing anti-dumping measures, in order to prevent oversupply from China.

The federation will also ask the BOT to reveal more information about inflows and outflows, so that business operators are made aware of the situation and can adapt their strategies in a timely fashion.

Meanwhile, Sa-ard Theera-rojanawong, executive vice president of Bangkok Bank's Foreign Exchange Trading Department, said the baht was expected to settle at a rate of 37 to the dollar over the next six months.

But he believes there will be more fluctuation before it stabilises, because many investors are waiting for the right time to take money out of Thailand.

Sa-ard said that following Wednesday's cut in the central bank's policy interest rate from 5 per cent to 4.75 per cent, the rate might be continually slashed over a short period, in order to stimulate the country's consumption and investment.

Aat Pisanwanich, director of the International Trade Studies Centre at the University of the Thai Chamber of Commerce, predicted the interest-rate cut would have a positive effect on domestic consumption after Thailand's economy has faced many challenges.

He said the Kingdom lost exports valued at Bt105.976 billion last year, because the baht rose by 14 per cent against the dollar. Most business operators want the government to keep the currency stable or allow it to strengthen gradually, in line with other currencies, so they can manage their business strategies, especially when quoting product prices.

"If the government doesn't make it stable, some operators might give up their businesses, others might be forced to reduce their production in the next three years, because they can't compete with their rivals," he said. He added that many firms were adapting themselves by reducing costs and making more value-added products.

Chalida Ekvitthayavechnukul

The Nation