Exchange Rate Moving Favorably for the US Dollar

[Gaybutton]

In the past few days the exchange rate has been steadily improving for the US dollar. Only about three weeks ago the exchange rate came close to getting into the 32s. The lowest I recall seeing the rate was 33.02 baht to the dollar.

 

The exchange rate seems to be getting better. It's slow, but at least it has been steady over the past several days.

 

The closing rates for August 6 were:

 

US Dollar: 33.69

 

Euro: 46.48

 

British Pound: 68.715

 

Australian Dollar: 28.6325

 

Canadian Dollar: 31.725

[Guest BKKvisitor]

That is good news indeed. Hopefully it will be enough to save Thai businesses such as the one described below:

 

Surging baht drives Thai exporters to the wall

By Orathai Sriring | August 5, 2007

 

LAMPANG, Thailand (Reuters) - Naris Wongsanthitham is stressed.

 

His small wood company in rural Thailand is facing ruin because of the breakneck rise of the baht against the dollar and all he gets from the government is permission to open a dollar bank account and a sermon about innovation and "value-added."

 

"We can't hold dollars forever. We are in Thailand -- get real!" the 40-year-old said at his factory, which employs 250 people making salad bowls, chopping boards and bread bins in Lampang, 600 km (370 miles) north of Bangkok.

 

"And stop telling us to adjust and adjust. We've done a lot of adjusting already. And value-added? How do I add value to a chopping board? Line it with precious stones?"

 

As with thousands of small, medium and large export businesses across the country, Naris' life has become a daily ritual of calls to customers asking if he can raise his prices and calls to suppliers asking if they can cut theirs.

 

With exports accounting for nearly two thirds of the Thai economy, Naris' problem is a national problem.

 

"Business is very bad. The baht is hitting us a great deal," the 40-year-old said, fiddling constantly with his mobile phone. "I'm not sure we can raise prices again. We've already done it a few times since last year and most customers are not happy."

 

His 14-year-old company lost money last year on sales of 120 million baht ($4 million) when the baht rose 14 percent against the dollar, the most of any Asian currency.

 

This year, his prices were based on 36 baht to the dollar. The currency is now trading at 33.8, and touched 33.12 in July.

 

"It would be better to fold than make another big loss," he said.

 

SHUTTING UP SHOP

 

Naris has asked his staff -- all of them locals who have worked at the factory for years -- to take a cut from the 150 baht they earn each day to help keep the business afloat.

 

Others, however, are deciding enough is enough, and closing.

 

This week, Union Footwear said it would shut, with the loss of 2,300 jobs, after three years of losses it blamed in part on the baht's 17 percent rise against the dollar since early 2006.

 

Last month, the closure of a 5,000-worker garment factory near Bangkok sent shockwaves through the army-appointed government, which imposed capital controls in December to try to stem the currency's advance, but to little avail.

 

Economic ministers and central bank officials are holding almost daily baht crisis meetings, but many analysts say they are wasting their time, given the structure of the economy and its ever-expanding trade surplus.

 

Foreign cash flooding into the stock market -- a net $3.6 billion so far this year -- is adding to the pressure on the baht, the third-strongest Asian currency this year behind the Indian rupee and Phillipine peso despite the controls.

 

In response, the Bank of Thailand (BoT) has relaxed rules on foreign currency holdings to try to stop exporters such as Naris selling their dollars, and started to encourage more Thais to invest abroad.

 

MORE HEDGING

 

Larger companies are mitigating their baht exposure by buying hedging contracts or -- a more accessible option to the likes of Naris -- switching export prices into euros, whose exchange rate against the baht has hardly changed this year.

 

"We have no currency risk this year as we have full-year hedging," Anusorn Muttaraid, a director of Delta Electronics, Thailand's largest listed electronics firm, said. The company posted a foreign exchange loss last year.

 

Despite hedging, some of Thailand's biggest exporters are up against it.

 

"It's tough," said Thiraphong Chansiri, president of Asian tuna giant Thai Union Frozen Products (TUF).

 

TUF, the company behind the U.S. "Chicken of the Sea" tuna brand, recorded a first-quarter sales increase of 3 percent in dollar terms but a 7 percent decline when changed into baht.

 

Most economists believe export growth will fall back this year to about 12 percent from 17 percent last year.

 

At first glance, that appears to suggest the sector is not faring too badly.

 

However, when measured in baht, the picture is nothing like as rosy. For instance, exports rose 18 percent in dollar terms in June this year from 2006, but only just over 5 percent in baht.

 

BoT data also shows the lion's share of export growth is accounted for by the high-technology sector, suggesting that bleak times lie ahead for firms at the other end of the scale.

 

"We know business is not good," said 45-year-old Sombat Boonsong, who has worked at Naris' factory for 10 years. "But what can we do?" he added with a sad smile.