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Economy

Somkid’s departure sees baht drop further

Jack Burton

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PHOTO: Financial Times

The baht’s current shine as the ‘safe’ current in Asia has lost its lustre. After riding high as Asia’s best performing currency last year, the baht has wiped out all of its 8% gains this year during the Covid-19 crisis, and yesterday’s announcement of the resignations of Deputy PM Somkid Jatusripitak and “the four big boys” (4 of Prayut Chan-o-cha’s economic ministers) saw it drop even further, reflecting investors’ concerns about the government’s continued economic policies.

Reuter’s reports that it’s now Asia’s weakest currency against the US dollar, down 5.5% year-on-year, and the New York Time calls Thailand Southeast Asia’s “worst performing economy”.

The baht’s value fell to 31.69 against the greenback as of 6:54pm yesterday from 31:56 on Wednesday. At one point it touched 31.76. This is in stark contrast with last year, when the baht emerged as Asia’s top performing currency, eclipsing the 30 baht mark before the New Year, driven by the country’s large current account surplus and ample foreign reserves.

Somkid and the others tendered their resignations after mounting pressure from the ruling Palang Pracharat Party amid a leadership reshuffle, which has undoubtedly been hastened by the exodus.

The resignations clear the way for the cabinet shakeup demanded by the PPRP after supporters of Deputy PM Prawit Wongsuwon pushed for him to become the new party leader last month. The reshuffle of the economic team has caused jitters among foreign investors, who are concerned about continuity in the government’s policies – especially regarding the Eastern Economic Corridor, a special economic development zone of 3 eastern provinces, according an economist at Standard Chartered Bank (Thai).

The Bank of Thailand’s Monetary Policy Committee is poised to cut the policy interest rate by .25% next month from the current all-time low of 0.50% in the event of a second wave of coronavirus on a large scale, according to Bank of Thailand’s senior director of economic policy. His comments echo the central bank’s deputy governor’s recent remarks about how the central bank has not shut the door to further monetary policy easing.

The Bank of Thailand paused its benchmark rate at 0.50% in June to preserve policy space amid heightened economic headwinds after cutting the key rate three times this year by .25% each time.

Somkid's departure sees baht drop further | News by Thaiger

GRAPH: xe.com

SOURCE: Bangkok Post

 

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3 Comments

3 Comments

  1. Avatar

    Daniel

    Friday, July 17, 2020 at 6:39 pm

    That’s good news for export and tourism

    • Avatar

      Wiliam G Benedict

      Monday, July 20, 2020 at 1:52 pm

      What tourism? My friends who have lived here for 12 to 25 years are not able to get home to their families in Thailand due to the severe restrictions and costs imposed by the present government under the guise of an emergency health crisis that does not exist.

      The Baht should be 36 or more to the US Dollar, but that will not help the tourists who are not welcome here anyway. It might help exports of Thai Rice, Sugar, Durian, Mangoes, and other things, if the system was running smoothly; it is not.

  2. Avatar

    Toby Andrews

    Saturday, July 18, 2020 at 12:40 am

    Yes is he taking to the lifeboat before the ship of Thailand hits the rocks?
    Then he can say, nothing to do with me. I was not on the bridge.

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Jack Burton is an American writer, broadcaster, linguist and journalist who has lived in Asia since 1987. A native of the state of Georgia, he attended the The University of Georgia's Henry Grady School of Journalism, which hands out journalism's prestigious Peabody Awards. His works have appeared in The China Post, The South China Morning Post, The International Herald Tribune and many magazines throughout Asia and the world. He is fluent in Mandarin and has appeared on television and radio for decades in Taiwan, Mainland China, Hong Kong and Macau.

Economy

Thailand Consumer Confidence Index hits record low

Neill Fronde

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PHOTO: Thailand's Consumer Confidence index slips again to below the pre-pandemic record. (via CNN)

The University of the Thai Chamber of Commerce has reported that the Consumer Confidence Index has hit another new record low of 46.0 in April. The Covid-19 global pandemic has had a devastating effect on the economy and consumer confidence has fallen frequently to the lowest points that it has seen since 1998.

The president of the UTTC believes that consumers generally don’t feel like there has been much of a recovery for the economy since the global pandemic began and without a stimulating event to motivate economic growth, the index is expected to continue to fall further. The university estimated that if the third wave of Covid-19 continues past the end of May the economy can expect to lose 400 to 600 billion baht.

The UTTC president stressed that the government should hasten to step up relief measures and make sure they continue relief and economic stimulus throughout the pandemic to avoid economic catastrophe. He predicted that the economy and the Consumer Confidence Index will continue on a downward slope without any hope of improvement until the vaccine rollout gets well underway towards herd immunity, and new Covid-19 infections are decreased dramatically.

Today saw another 2,101 new Covid-19 infections and 17 deaths in Thailand. Vaccination efforts are continually being stepped up, but still remain woefully slow.

The Consumer Confidence Index first started falling last year, with a drop below the previous record low in 1998 in April of 2020, when it fell to 47.2. A few months later, by July of last year, it had recovered significantly, climbing back over 50. But by March of this year, the index had fallen again to 48.5. With April’s tumble of 2.5 points, the Consumer Confidence Index pushes once again to a new record low.

SOURCE: Thai Business News

 

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Economy

Stimulus package gives more back the more you spend

Neill Fronde

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PHOTO: A new stimulus package aims to get the middle class spending. (via Flickr - Marco Verch)

A new stimulus package targeting middle and high-income people aims at increasing spending by offering more e-voucher the more you spend. Ying Chai Ying Dai, which translates to “the more you spend the more you get”, will reward those who spend between 46,000 and 70,000 baht with a 7,000 baht e-voucher. This part of the government’s 225 billion baht stimulus package hopes to encourage 4 million qualifying middle- to upper-class people to spend more money by refunding 10-15% back, according to the Finance Ministry’s Fiscal Policy Office.

People wishing to participate must register and make their purchases through a government e-wallet system. The system works by refunding 10 to 15% of purchases with a maximum of 7,000 baht. So at 15%, a person who spent 46,000 baht would receive back the full 7,000. On the 10% scheme, 70,000 baht in spending would be necessary to reach 7,000 cashback. No details were available on what determines the percentage level.

An additional 2,000 baht will be available for people participating in the “Section 33 Rao Rak Kan” and “Rao Chana” scheme. The plans are expected to push 85.5 billion Baht back into the economy as recipients must spend the cash by the end of June.

The 50/50 stimulus program that has been popular with the government covering half of what people spend for half for food, drink, and other items up to 150 baht per person per day will also be expanded. That plan began on October 23, and ended at the end of 2020, covering 10 million people with each receiving 3000 baht. The second phase of the popular program added 5 million more people and raised the limit to 3,500 baht per person.

A third phase of the “Khon La Khrueng” stimulus plan is expected to begin in July with participants getting a maximum of 3,500 baht each to spend, and opening the program to 16 million new people. This massive expansion though will stipulate that anyone participating in this program cannot also participate in the Ying Chai Ying Dai scheme.

All of these cash and voucher benefits aimed at supporting vulnerable groups, along with cash handouts for people who have state welfare cards, are part of 245 billion baht the government is spending in an attempt to keep the economy from collapsing. This falls under an emergency loan decree allocating the government 1 trillion baht total to cope with Covid-19.

SOURCE: The Phuket News

 

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Economy

Thailand increases durian exports to China by 14% this year

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Thailand has exported 14% more durian to China in this year’s first quarter over the same period last year. The Trade Negotiations Department Director General says Thai durian auctions in the first quarter secured 186 million, making up 88% of the total amount of Thai durian exports to world markets.

Last year, Thailand exported US1.5 billion worth of durian to China, a 78% increase from 2019. China’s share accounted for 73% of total Thai durian exports to world markets. 18 countries have free trade agreements for fruit with Thailand. Thailand is actively exporting fresh fruit with its top buyers being Australia, Chile, China, Hong Kong, Indonesia, Malaysia, the Philippines, and Singapore. The most popular fruits are the national delicacy of durian, along with mango, mangosteen and longan.

Despite the increases in durian exports, farmers have been worried about Covid-19′s effect on the industry. Earlier in 2021 health authorities in China circulated a press release stating that imported cherries from Chile had been tested and found to have Covid-19 contamination. This statement prompted a huge drop in Chilean cherry prices. Thai growers are worried the same might happen to durian imports. As the seriousness of the Coronavirus in Thailand reaches new widespread levels, one instance of a durian container being linked to Covid-19 could spur a total ban on importing fruit from Thailand.

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SOURCE: MENAFN

 

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