FTI Secretary-General Thanit Sorat said the rapid strength of the Thai currency was mainly due to the inflow of foreign funds to turn a profit in Thailand where interest rates are higher than in western countries.
Interest rates from the government’s bonds provide 3-3.5 per cent yields, higher by 1 per cent than in the US and Europe, he said, expressing belief that the inflow of foreign funds for speculative investment in the Thai stock market will gradually slow down and the central bank has closely monitored the situation.
The current profit earning ratio in the Thai stock market has increased 16 fold which is rather high, he said.
He added that manufacturers and exporters in the automotive and electronics industries have cashed in on the strong Thai baht while small and medium-size businesses are on the losing side due to higher prices of imported raw materials.
The appreciating currency has weakened Thai exporters’ competitive edge by 1-2 per cent due to higher product prices but they are more concerned with the fluctuating currency movement rather than the strong baht, he said.
The most important factor favouring export growth is the economic stability of Thailand's trading partners, not the country's currency strength or weakness, he said, citing an example in 2011 when the Thai baht was Bt29 to a US dollar but Thailand enjoyed a 14-15 per cent export growth.