The baht opened at 33.58 to the US dollar on Monday, strengthening from Friday’s close of 33.63 and reversing a downward trend.
The Thai currency is expected to move between 33.45 and 33.65 during the day and between 33.30 and 33.80 during the week, Krungthai market strategist Poon Panichpibool said.
Poon advised investors to be aware of volatility over this week’s long Songkran holiday as transactions will be fewer. He expects the baht to swing sideways in the absence of new market factors. However, the Covid-19 situation after Songkran might affect foreign transactions in the short term, he added.
Poon said the baht’s resistance level would be at 33.70 to 33.80, at which point exporters would offload the dollar. Meanwhile, importers are waiting to buy on dips at 33.30.
Amid high volatility in the currency market, businesses should use hedging tools such as options to manage risks, he said.
He added that the dollar might strengthen after the first round of the French presidential election if the market is worried that Emmanuel Macron could lose the second round.
However, any dollar strengthening would be limited if the European Central Bank signalled a tighter monetary policy.
Spurred by growing domestic demand for electric vehicles, manufacturers in Japan and China are set to seek government subsidies to cut EV prices in Thailand, according to a Finance Ministry source.
Toyota is expected to join the Excise Department’s subsidy programme later this month, the source said.
“It will be the first Japanese car manufacturer to take part. This move is expected to prompt other carmakers from Japan and Europe to join so that they can avoid missing out on business opportunities,” the source added.
Chinese automakers Geely, Neta and Changan have also expressed interest in the subsidy programme and are in talks with the Excise Department, according to the source.
Meanwhile, Japanese carmaker Honda will likely postpone its participation until next year as it prepares its EV assembly operation in Thailand, the source said.
The Excise Department is offering subsidies ranging from 70,000-150,000 baht, depending on the size of battery used.
The subsidies are already being applied to cars offered for sale by Chinese brands such as MG, Haval and Ora – both completely knocked down (CKD) and completely built-up (CBU) models. Under the subsidy deal, carmakers can import CKD and CBU units for sale for two years. In the third year, they must make one unit in Thailand for every unit they import. That ratio rises to 1.5:1 in the fourth year.
Failure to meet those terms will be penalised with fines and additional import and excise taxes.
The Excise Department sees signs of increased interest in EVs among Thai consumers, said director-general Lavaron Sangsnit.
He pointed out that 3,000 EVs were reserved at the latest Thailand Motor Show, representing 10 per cent of all bookings made at the expo, which finished on April 3.
“This was a very good sign. We believe the momentum is quickly going in this direction,” he said.
The National Electric Vehicle Policy Committee headed by Energy Minister Supattanapong Punmeechaow will visit Japan early next month for talks with Japanese carmakers about potential investment in EV manufacturing in Thailand, Lavaron said.
Consumer sentiment in March dipped to 42.0, the lowest in six months, because of Omicron worries and the Russia-Ukraine war fallout, the University of the Thai Chamber of Commerce (UTCC) announced on Friday.
UTCC rector Thanawat Polwichai announced at a press conference the results of the survey on sentiment indices compiled by his university’s economy and businesses forecast centre.
Thanawat said the consumer confidence index in March was 1.3 points lower than February’s 43.3, and the confidence index has fallen for three months in a row.
The university explained that an index lower than 100 points showed weak purchasing power because of slow economic recovery.
Thanawat said the key factors that prompted consumer sentiment to fall were people’s worries about the Omicron situation and the fallout from the Russia-Ukraine war.
He said the high infection rates affected the tourism and service sectors, which have not recovered yet. The situation was aggravated by the fallout from the war that had caused oil prices to rise sharply, affecting the cost of goods manufacturing.
Thanawat said the rising oil prices and manufacturing costs had stepped up pressure on the recovery of the global and Thai economies and Thai exports, as a result consumer sentiment had dropped because people’s incomes could not match the rising cost of living.
He said the UTCC expects consumer sentiment to improve in May when the government’s measures to mitigate the people’s cost of living would take effect.
He said the UTCC still maintained its economic growth forecast at 3.5 per cent.
Thanawat said there were good signs that consumer sentiment would rise in the late second quarter because the Centre for Covid-19 Situation Administration has eased travelling restrictions on foreign arrivals since April 1. The CCSA lifted the requirement of an RT-PCR test before departure to Thailand. The relaxation of measures would help the tourism sector to start recovering and becoming a boon to the economy.
He said if the government continues the co-payment subsidy scheme for consumers in June, it would help the economy recover in the late second quarter.
The rector said it is expected that the number of Covid infections would rise to about 50,000 or 100,000 a day after the Songkran holidays, but the UTCC believes the government would not lock down the country again as it would hurt the economy.
He called on the government to relegate Covid-19 to an endemic in June instead of July since most people have already received booster jabs. He said the announcement a month ahead of schedule would help quicker recovery of the Thai economy and it would add about 0.1 or 0.2 per cent to the growth.
But if the government fails to announce Covid-19 as an endemic soon, Thailand’s economic growth would fall by 0.5 per cent, or about Bt70 billion to Bt100 billion.
Thanawat added that the UTCC also found the Thai Chamber of Commerce’s confidence index had dropped to 35.5, the lowest in four months. The index gauges the sentiment of the business sector and chamber members in all provinces.
Thailand’s sovereign credit has been rated at Baa1, or equivalent to BBB+, by Moody’s Investors Service, which maintained the country’s outlook at stable, Patricia Mongkhonvanit, director-general of the Public Debt Management Office (PDMO), said on Friday.
According to the Moody’s report, the affirmation of the Baa1 ratings reflects Moody’s expectations that Thailand will continue to display economic resiliency to future shocks, underpinned by its large and diverse economy and strong macroeconomic policy effectiveness.
“The rating also takes into account material downward pressure on the economy’s growth potential from rapid population ageing and likely long-term economic scarring from the pandemic,” said the report.
“While Moody’s expects Thailand’s government debt to increase and remain markedly higher than pre-pandemic norms, leaving the government with weakened fiscal strength for some time, Thailand’s fiscal metrics will still be stronger than most Baa-rated peers. Further, Moody’s assesses it likely that the government will quicken its pace of fiscal consolidation in the next two to three years once the economic recovery takes hold.
“The stable outlook indicates balanced risks to Thailand’s credit profile. Thailand’s economic strength may benefit from productivity gains, including through the ramp-up of the Eastern Economic Corridor to a greater extent than Moody’s currently expects. By contrast, the economic and social costs of ageing and Thailand’s capacity to absorb them have yet to be tested,” added the report.
“Meanwhile, the authorities’ track record of effective macroeconomic policies, including prudent fiscal policies, despite noise in the political landscape, contributes to the stable outlook,” the report said.
“Moody’s expects Thailand’s real GDP growth to come in at above potential rates for the next two to three years, as the effects of the pandemic fade and the tourism industry is slowly recovering,” said Patricia.
“The rating agency has, therefore, projected the economy to expand by 3.4 per cent in 2022 and 4.8 cent in 2023, which is not far from the estimation of the Asian Development Bank, which recently forecast that Thailand’s GDP will grow by 3 per cent this year and 4.5 per cent in 2023.”
Finance Minister Arkhom Termpittayapaisith on Thursday dismissed concerns of six former central bank governors, saying the government has been using proper finance policies and the country still enjoys financial strength.
Arkhom was responding to six former central bank governors, who had expressed concern during a recent seminar that excessive spending by the government would expose the country’s financial status to risk. They had also criticised the government for using deficit budget for several consecutive years.
Arkhom defended the government, saying the current spending in comparison with revenue could not be considered excessive, arguing that the deficit ratio in the national budget had actually dropped for fiscal 2023.
“Anyway, a deficit in the budget is still necessary but we have reduced the ratio,” Arkhom said.
He said the Finance Ministry had to make sure that the policies would facilitate economic recovery.
“In the past, the central bank used to increase the policy interest rate once it saw signs of economic recovery but I have to thank the current central bank governor for understanding the situation [and not increasing the policy rate],” Arkhom said.
“The Covid-19 situation is not over yet. This shows that the fiscal policies are in line with the policies of the Finance Ministry.”
The minister said the government had to borrow to tackle the Covid-19 crisis during the past two years and the practice was similar to what was done during the financial crises in 1997 and 2009.
“Every crisis needs money, so the government has to take recourse to a deficit budget and this policy is used in every country,” Arkhom said.
The minister said the government had raised the public debt ceiling, as had been done in the past, but the ceiling would be lowered once the economy recovers.
The finance minister accused previous governments of failing to restructure the country’s tax base after they introduced policies to reduce tax rates, such as corporate tax rates, leaving the present government with inadequate revenue. He said the current government is trying to restructure and expand the tax base.
“In the past, we didn’t do this but the government’s expenditure has been rising from investments, such as investments for roads to connect to rural areas, to allow rural people to bring their products to markets.
“And fixed expenditure is also rising, especially spending for various welfare schemes. Now, we have to take care of the elderly as well, so we have to restructure the tax structure,” Arkhom added.
The minister dismissed concerns that Thailand would face stagflation, a scenario in which the country’s inflation rises while the GDP declines.
He said the country’s GDP is rising but the cost is rising as well. “So, the economy is expanding quantitively and it’s not a concern. We only have concern about inflation because the rising cost would slow down spending by consumers. So, we must be able to control the inflation,” Arkhom said.
He said the government would not launch the THB1,500 cash subsidy co-payment scheme again because the economy has started to revive and the people are regaining their purchasing power. Instead, the government would provide purchase subsidies to only vulnerable groups, such as the registered poor who hold state welfare cards.
Speaking at the same press conference, Krisada Chinavicharana, permanent secretary for Finance, said the country has been using a deficit budget for most of the past 40 years.
He said Thai governments had been successful in making a balanced budget for only two years in the past 40 years.
He explained that Thailand is a developing country that needed to invest in infrastructure, so it needed to use a deficit budget.
He said the government could still manage the public debt because the current ratio of public debt is 60.17 per cent to GDP, well below the 70 per cent ceiling.
He said the treasury reserve now stands at about THB580 billion and the government is expected to receive revenue of THB2.4 trillion at the end of the fiscal year and treasury reserves would remain at about THB500 billion.
The baht opened at 33.51 to the US dollar on Friday, unchanged from Thursday’s closing rate.
Krungthai Bank market strategist Poon Panichpibool predicted the Thai currency would move between 33.40 and 33.60 during the day.
Poon said the baht will continue to swing sideways.
The Thai currency is being pressured by the strengthening dollar after the US Federal Reserve moved to implement tighter monetary policies, as well as demand for “safe-haven” assets in the short term.
Poon advised keeping a close watch on foreign transactions in Thai stocks, forecasting short-term foreign outflows. However, he expected foreign investors to continue purchasing bonds, which would support the baht and ensure it did not weaken much.
Exporters are selling the dollar in a range between 33.50 and 33.60. Poon said the baht would likely not weaken past that point unless the market goes heavily risk-off.
Amid high volatility in the currency market, businesses should use hedging tools such as options to manage risks, he added.
The Stock Exchange of Thailand (SET) Index is expected to fluctuate between 1,670 and 1,690 points on Friday due to a lack of positive sentiment, Krungsri Securities said.
It added that the index would be under pressure due to uncertainty over the US Federal Reserve’s move to shrink its balance sheet and raise the interest rate to curb inflation, as well as a lack of progress in Russia-Ukraine peace talks.
Meanwhile, foreign fund outflows both in stocks and futures markets would pressure the index,” Krungsri Securities said. “Hence we advise investors to buy shares which have gained specific positive sentiment.”
It recommends the purchase of the following as an investment strategy:
• GPSC, BGRIM, SCGP, SCC and EPG would benefit from the falling oil price.
• AOT, AAV, BA, MINT, CENTEL, ERW, CPN, CRC, HMPRO, CPALL, MAKRO, AMATA and WHA would benefit from countries reopening.
• BDMS, BH, INTUCH, ADVANC, BTS and BEM, which can tolerate market volatility.
The SET Index closed at 1,682.41 on Thursday, down 18.77 points or 1.10 per cent. Transactions totalled 97.09 billion baht with an index high of 1,694.23 and a low of 1,674.81.
Total spending over next week’s Songkran holiday could fall to the lowest in a decade, the University of the Thai Chamber of Commerce (UTCC) warns.
Spending on travel, goods and services over Songkran will pump about 106.7 billion baht into the economy, down 5.4 per cent from the same period last year, according to a UTCC survey.
“Compared to the Songkran festival in 2019, before the Covid-19 situation, the estimated cash flow this year is down 21.4 per cent and could be the lowest in the past 10 years,” said Thanawat Pholwichai, director of the UTCC Centre for Economy and Business Forecasting on Thursday.
The survey showed that 64 per cent of respondents were worried about rising living costs as prices of products and fuel increase. They said this would prompt them to save up money instead of indulging in spending sprees during the holiday.
“45.1 per cent of respondents said they expected to spend less on Songkran this year compared to the previous year,” Thanawat added.
The UTCC estimates the Thai economy will grow 3-4 per cent this year, higher than estimates made by other institutes. It cited a gradual return to normality as people learned to live with Covid-19 due to the milder symptoms and lower death rate of the Omicron variant.
“Also, the impact of the Russia-Ukraine war will start to ease from the second quarter, after which Thailand’s exports are expected to grow 4-5 per cent due to rising global demand,” Thanawat said.
Other factors pushing economic expansion this year include the government’s easing of restrictions on foreign arrivals to boost tourism, and economic stimulus campaigns such as the “Let’s Go Halves” spending programme, phase 5 of which is expected to start in June and generate 45 billion baht in cash flow to the economy.
On fuel, the centre said the oil price will have no significant effect on the Thai economy if it does not exceed US$100 per barrel. The UTCC is confident the oil price will remain below that mark this year, after the United States last week announced it was releasing 1 million barrels per day from its reserve over the next six months to make up for the loss of Russian oil from global markets amid the Ukraine conflict.
The Board of Investment (BoI) has eased its terms for investment incentives in the electric vehicle (EV) charging business to help small operators or start-ups better access BoI benefits, secretary-general Duangjai Asawachintachit said on Thursday.
She said that with increased start-up participation, the ecosystem and infrastructure for EVs in Thailand would be expanded, which is necessary to build the confidence of prospective EV users.
The BoI’s executive board resolved at its meeting on Thursday to offer a five-year exemption from corporate tax to investors of EV charging stations, with at least 40 chargers and no less than 25 per cent of them delivering quick-charge services.
Investors who do not meet the requirements are entitled to a three-year exemption from corporate tax, according to Duangjai.
Also, the BoI decided to drop a requirement for the ISO 18000 international standard for radio frequency identification (RFID) and a term that eligible investors must not seek investment privileges from any other state agency.
However, investors seeking BoI benefits are required to connect their charging stations with an integrated central platform that manages the country’s charging station network. This is aimed at creating an ecosystem for EVs and charging stations, the BoI chief said.
Between January and March this year, BoI received applications for 378 investment projects worth a total of THB110.7 billion. The amount was down by 6 per cent when compared to the same period last year.
However, projects with foreign direct investment that sought BoI privileges totalled THB77.2 billion in the first quarter, a 29 per cent increase from the same period last year.
Most of the investments are from Taiwan (THB37.1 billion), followed by Japan (13.8 billion) and China (13.3 billion).
Most applications for BoI benefits came from the automobiles and parts industry, agricultural products and processed foods, electric appliances, and electronic products.
Meanwhile, projects worth THB60.3 billion have sought investment privileges in the Eastern Economic Corridor covering Rayong, Chonburi and Chachoengsao, according to the BoI.
They include projects that require advanced technologies in production, hard-disk drive suspension, multilayer printed circuit boards, multilayer ceramic chip capacitors, and fibre optics equipment.
The baht opened at 33.58 to the US dollar on Thursday, weakening from Tuesday’s close of 33.43.
Krungthai Bank market strategist Poon Panichpibool predicted the Thai currency would move between 33.50 and 33.70 during the day.
Poon said the baht might swing sideways in a wide range. The currency may weaken during the day as the dollar strengthens due to market worries surrounding the Russia-Ukraine war and the US Federal Reserve’s move to implement tighter monetary policies. Moreover, the Covid-19 situation in China has also affected investment in Asia, he pointed out.
Additionally, the baht might fluctuate as the European Central Bank (ECB) holds a key meeting. If the ECB signals that it will increase the interest rate, the euro might strengthen and pressure the dollar into weakening.
Poon advised a close watch on foreign transactions. He expected foreign investors to continue purchasing Thai assets, which would support the baht and keep it from weakening further during this period.
Poon said the baht’s resistance level would be 33.70, at which point exporters would offload the dollar. Meanwhile the key support level is 33.20, which would spur importers to purchase dollars.
Amid high volatility in the currency market, businesses should use hedging tools such as options to manage risks, he added.
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