Ken Nakarin Chuan is Liu-Chutinan. Reserve Economic reporter for THE STANDARD, come to talk and analyze the situation Including advice for businessmen and entrepreneurs in The Secret Sauce: Executive Espresso.
Look at the baht appreciation situation in Asia And the world's major currencies
The appreciation of the baht means that we will use less baht to exchange foreign currency. For example, before, we used 35 baht to exchange for 1 US dollar, but now we use 30.5 baht to exchange for 1 US dollar. Watched since the beginning of the year The baht strengthened continuously, such as on September 18, 2019. The baht was around 30.54 baht per US dollar. Which is the most appreciated in 6 years and also the most appreciated in Asia as well If compared with the major currencies Of the world like the US dollar from the beginning of the year to the present The baht will be stronger at 6.2%. The baht is stronger compared to 9.6% in the euro. The pound, the baht appreciation by 8.3%.
Why is the Thai baht appreciating?
- Thailand has a trade surplus with foreign countries. Due to the structure of the Thai economy with foreign money mainly from exports and money from tourists
- World economic fluctuations The appreciation of the currency will depend on the currency to be compared. If the main economic countries of the world have situations that cause concern for people or investors Currency will also fluctuate, such as trade-war factors, the US-China, Brexit, the oil war, the slowing economic numbers. Interest increase New policies or measures etc.
- The reason that the baht is the strongest in Asia. Because investors began to see the baht as a safe haven or safe to invest. For example, safe haven is an investment to buy gold. Short-term and long-term bonds or stored in currencies such as the yen
What kind of baht strengthens or depreciates?
There are both advantages and disadvantages depending on the business model. Because if the currency appreciation Exports will get less money. But the importer will get more money Imported products are also cheaper. And there are still advantages to the minor, which are Thai people traveling abroad have been cheaper. If the currency is weak, it will help increase the ability of Thai people to compete. Foreigners visiting Thailand are cheaper if compared to other countries. The fluctuation of currency rates is mainly caused by external factors. But in the country, it is overseen by the Bank of Thailand that oversees monetary policy Both raising and lowering interest rates, such as July 22, 2019, the Bank of Thailand has implemented measures to monitor short-term capital inflows. To resolve the speculation and appreciation of the baht within 5 days after the foreign capital flows out of the short-term government bonds market, 8,225 million baht, resulting in the baht depreciation 0.48%. Operator Should have insurance against currency risk first
Go back and look at the baht and analyze the future value of the baht.
Looking at the currency data for the past 5 years, the weakest period was October 2015. The baht was 36.42 baht per US dollar. Moving at least 35 baht until March 2017, the currency began to strengthen to 34.00 baht per US dollar. And increasingly appreciating Up to present in September 2019 at 30.5 baht per US dollar
Due to the baht appreciation situation Which businesses are affected?
The net export value accounts for 5-6% of GDP. Directly affected due toAppreciation baht Allowing export sector operators who receive foreign currencies to exchange back into Thai baht for less value. Therefore, it will cause the gross margin of the exporter to decrease. There are 3 main business groups affected
1. The group that has lost benefits The group that mainly relies on export revenue and uses domestic raw materials will have the greatest impact, such as rubber products, seafood, meat and ornaments.
2. The groups that receive benefits are Domestic sales and mainly import raw materials Will reduce the cost of importing foreign goods or raw materials, such as machinery, metal parts, medical supplies, medical instruments Electrical appliances and textiles
3. Groups that are not affected are Businesses that rely on export revenue But imported raw materials from foreign countries to produce, able to prevent exchange rate risks such as automobile parts, beverages and chemicals.
The value of exports accounts for 15% of Thai GDP. "When the baht appreciates The tourism sector is very affected. Because this business is a huge source of income for the people And most of those who do tourism business are small businesses and many people When fewer tourists come to Thailand Due toThe strengthening baht makes foreigners visiting Thailand more expensive. Even if spending the same budget, but less able to buy things in Thailand Causing Thai people to have less income as well The income from foreign tourists who spend in Thailand in 2019 is expected to be 2.1 trillion baht, although growth of 6.0% compared to the previous year. But considered to be slow compared to the year 2018 which grew 9.4% year
Things to keep an eye on Because it will affect the currency
Track the global economy such as the Trade War, the Oil War, Brexit and the Bank of Thailand interest rate cuts. Which is expected to reduce 1 more time this year. If the Fed cuts interest rates, the Bank of Thailand will need to reduce accordingly
- Develop your own business such as importing machinery To reduce costs in the long run
- Get insurance against currency risk in order to prevent currency fluctuations.
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