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The almighty baht set to fall further despite rate cuts, stimulus

Greeley Pulitzer

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The almighty baht set to fall further despite rate cuts, stimulus | The Thaiger
PHOTO: Chiang Rai Times
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A lot has changed for the baht.

It was only months ago that The Bank of Thailand considered drastic measures to rein in the rambunctious baht, whose massive gains in currency markets made it the darling of speculators. In December Kasikorn Bank released a report outlining reasons the baht “will remain strong into 2020.” The bank’s research arm forecast the baht would move in a range of 30.1 – 30.5 baht to the US$ for the next few quarters at least. (As of today exchange rate is 32.83 US$ to 1 baht) They warned then that Thailand’s November export data would likely to be in negative territory, another victim of the “continuing strength of the local currency.”

Those days are gone, and the baht now looks to tumble further after the BoT cut interest rates to counter the impact of the Covid-19 coronavirus. The decisions came in a hail of announcements starting with an emergency rate cut on Friday night. The new measures are a further blow for the baht, which has already slipped over 9% this year, more than erasing last year’s gains. There’s also slowing economic growth and the worst drought in decades. And a delay in the government’s budget due to political wrangling didn’t help matters.

Friday’s move cut rates by 25 basis points to a new record low of 0.75%. It was the second reduction in as many months, coming ahead of today’s scheduled policy meeting. The policy committee has said the virus outbreak is likely to be “more severe” than previously thought and it will “take time for the situation to normalize.”

Only two weeks ago the government announced a massive stimulus package, well beyond its earlier Chim Shop Chai (Eat Shop Spend) programs, to “return growth to positive territory.” Policymakers went before the media, saying they’ll set up a mechanism to allow banks to use money market and bond funds for collateral to enhance liquidity and make funds available for companies to refinance corporate bonds.

The coronavirus has already taken its toll on Thailand’s newly-struggling currency, decimating the nation’s tourism industry, largely by reducing visitors from China, who alone accounted for some 3% of the country’s gross domestic product. Tourism revenue has slumped 43% in February from a year earlier. Furthermore exports tumbled 4.5% the same month, according to a Bloomberg report.

The BoT’s benchmark rate is now just a fraction above the level of inflation, putting Thailand on the cliff of joining the list of nations with negative real policy rates.

“The odds of a recession over the next 12 months have jumped to 30% from just 10% a year ago. Across Asia, only Japan has a higher probability”, according to Bloomberg surveys of economists.

While the number of virus cases in Thailand remains well below those in the world’s worst-affected countries, the recent spike suggests there’s potential for the situation to get a lot worse, meaning even more bad news for the baht. Yesterday there was an announcement of a state of emergency and the Cabinet’s approval of a 117 billion baht stimulus package.

SOURCE: Chiang Rai Times

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Coronavirus (Covid-19)

Thai government screws sex workers over 5,000 baht stimulus

Greeley Pulitzer

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Thai government screws sex workers over 5,000 baht stimulus | The Thaiger
PHOTO: Pattaya One

Thousands of Thai sex workers, estimated to be around 300,000, mostly out of work due to the Covid-19 coronavirus crisis, will receive no labour protection from the government. Empower Foundation, an organisation for the rights and opportunities for sex workers across Thailand, has sent a letter to the government pleading for help.

“Many are mothers and main family providers and carers. Due to Covid-19 the government has ordered closures of entertainment places which means that over 100,000 sex worker across Thailand are out of a job. In emergencies women are often the ones who do the work of caring for others. Yet this work is not recognised, nor compensated or supported.”

“For example, even though entertainment places are reported to earn around 6.4 billion dollars per year and sex workers create 4-10% of the GDP. Sex workers are criminalized and left out of labour protection and social security. The closure order affects sex workers who now have no income at all. Sex workers are ready to help society, but also still must pay their rent, live and care for their family.”

The organisation is yet to receive a response from the government, and it’s estimated the number of sex workers without a job across the country has now reached 300,000.

Mai Janta, a community representative of sex workers in Chiang Mai working at Empower Foundation, told reporters that they were the first to be affected when the government declared all entertainment venues closed.

“When the massage parlours, bathing venues, bars and karaoke closed we all agreed with and supported the government’s measures. Yet our kind of work means that we have zero chance of any income during this time. Also the government has shown no interest in helping at all. Now we can only follow the situation and check in on the women we know of, which is our 3,091 members across Chiang Mai.

“This government has focused on arresting and enforcing, never supporting. The labour law has never protected these women even though we contribute greatly to the economy. There are some women who are under the social security scheme; those working for larger businesses who have proper working hours such as beer girls, karaoke girls and such. But freelancers and women working in bars are often left out in the cold,” according to Chiang Mai City News.

“The government’s 5000 baht compensation, which is still not available and may not be for months, only applies to a few women, as most are migrant workers or tribal people with no Thai ID.”

“These are the most vulnerable of all. They have nowhere to go and no resources at all. What we want is the nearly 500 million baht the government seized a few years ago from the human trafficking owners of Victoria Secret and Natalie massage parlors.”

SOURCES: Chiang Rai Times | Chiang Mai Citynews

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Coronavirus (Covid-19)

Thailand’s 2020 exports to fall 500 billion baht

Anukul

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Thailand’s 2020 exports to fall 500 billion baht | The Thaiger
Vietnam Plus

There is no doubt Thailand’s fragile export business is gong to be hit hard by the coronavirus outbreak. Following on from the impacts of the high Thai baht value, regional competition and the fallout from the US-China trade wars, Thailand is poised for one of its worst performing export years.

“Under the worst-case scenario in which the coronavirus Covid-19 crisis exceeds 9 months (to September 2020), the University of the Thai Chamber of Commerce is forecasting exports could contract by as much as 7.1% this year, with the actual export value shrinking US$17.42 billion USD, or 557.72 billion baht.”

This from Aat Pisanwanich, the director of the Centre for International Trade Studies at the University of the Thai Chamber of Commerce.

“The impact of the outbreak alone is expected to cause Thai export value to decrease by 13.48 billion USD.”

“Thailand’s exports to the Chinese market are projected to drop by 1.2-13.5% this year to US$24.5 – 28 billion, the lowest it has been in six years.”

“Agro-industrial products are expected to see the most impact from the coronavirus crisis. The outbound shipments of this sector may decrease by 5.4-30% or US$299 million, products that are in risks include vegetable oil, beverages, canned and processed fruits, canned and processed vegetables, and canned and processed seafood.”

“ASEAN countries are forecasted to see the biggest decrease in export market value down by 5 billion USD, followed by Hong Kong down US$4 billion, Japan down US$3 billion, China down US$2 billion, Europe down US$1 billion and the US down $1 billion.”

The main factors resulting in Thailand’s export contraction with China include decreasing the income of Chinese citizens and the ban on foreigners entering the country.

SOURCE: Bangkok Post

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Coronavirus (Covid-19)

Ministries will give up 10% of their 2020 budget to fight Covid-19 in Thailand

Anukul

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Ministries will give up 10% of their 2020 budget to fight Covid-19 in Thailand | The Thaiger
PHOTO: asia.nikkei.com

The third round of government measures are set to apply 10% of the country’s fiscal 2020 budget allocated to each ministry, and put into a central funding pool to battle against the Covid-19 pandemic as well as the rehabilitation of the economy.

Deputy PM Somkid Jatusripitak says that the central fund will be overseen by PM Prayut Chan-o-cha.

“The measures will be focused on the people who live in rural areas and to stabilise the Thai financial market.”

The total budget allocated to Thailand’s key ministries amounted to 1.98 trillion baht and includes…

  • The Education Ministry at 368 billion baht
  • The Interior Ministry at 353 billion
  • The Finance Ministry at 249 billion
  • The Defence Ministry at 233 billion
  • The Transport Ministry at 178 billion.

“These contributions will be one of two key sources of funding to cope with the pandemic and the revival of the economy. The other is borrowing from domestic financial institutions, the government may issue an executive decree allowing this to be possible.”

“The public debt to GDP ratio is 43%, well below the ceiling of 60% set by the government’s fiscal sustainability framework. This allows the government plenty of room to increase public debt to help the rural sector and stabilise financial markets.”

“The public should not be too worried about the debt because the government’s fiscal and monetary status remains strong, with US$230 billion in foreign reserves. The government doesn’t need to borrow from the IMF and domestic financial institutions are flush with liquidity.”

Yesterday, Finance Minister Uttama Savanayana, Bank of Thailand governor Veerathai Santiprabhob and executives of the Securities and Exchange Commission, reported to PM Prayut on the progress made for the government’s plan to rehabilitate the economy, agreeing that the third set of measures needs to be approved soon.

SOURCE: Bangkok Post

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