KBank: Baht could shave B125bn off export revenue

More than 100 billion baht in possible export revenue could be lost this year if the baht’s year-end value remains unchanged from 32.57 against the dollar, the level at the end of last year, says Kasikornbank (KBank).

KBank estimates that 125 billion baht worth of export revenue could vanish if the baht’s value does not depreciate from 32.50 per US dollar, said KBank head of markets and research Kobsidthi Silpachai.

Import revenue could rise by 50 billion baht if the currency continues at this level, said Mr Kobsidthi. Under this scenario, the net loss would be 75 billion baht this year, he said.

KBank expects the baht to depreciate to 33 against the greenback at yearend, mainly because of external factors such as the US-China trade dispute and another likely rate hike by the US Federal Reserve.

Negative factors will dampen global trade and prompt China’s central bank to ease monetary policy to minimise adverse effects, Mr Kobsidthi said.

This would weaken the yuan’s value against the dollar, catalysing a depreciation in regional currencies such as the baht, he said.

Another Fed rate hike will cause foreign capital outflows from emerging markets, subsequently weakening regional currencies, he said.

The baht’s depreciation, however, is expected to be smaller relative to other regional currencies, thus reducing Thailand’s competitiveness in export value against regional peers, Mr Kobsidthi said.

On a year-to-date basis, the baht’s depreciation against the dollar is the lowest among Asian currencies at 1.2%.

The Indonesian rupiah and Indian rupee registered the highest depreciation rate at 16.6% each, followed by the Philippine peso (6.4%), South Korean won (5.9%), Taiwanese dollar (3.9%), Singaporean dollar (3.6%), Vietnamese dong (3.6%) and Malaysian ringgit (2.6%).

The Bank of Thailand, meanwhile, is anticipated to embark on raising the policy interest rate early next year, given stronger economic recovery momentum and higher inflation, Mr Kobsidthi said.

Confidence among the private sector is poised to improve with the upcoming general election scheduled for next year, he said.

Separately, Kiatipong Ariyapruchya, senior country economist at the World Bank, said Thailand’s economic growth is forecast at 3.9% next year, down from this year’s estimate of 4.5%, as a result of the US-China trade dispute.

Thai exports are projected to expand by 5% next year, down from this year’s projection of 7%, according to the World Bank.

Rising uncertainties in the money and capital markets are also expected to occur next year because the Fed rate hike will induce volatility in foreign capital flows in Thailand, Mr Kiatipong said.

Negative factors will dampen global trade. KOBSIDTHI SILPACHAI Head of markets and research, KBank