The rise of the Thai baht this year cannot be ignored, and even the central bank's intervention may be limited.
Thai baht is the best-performing currency in emerging markets this year. The main momentum is of course benefiting from the growth of the country's current account surplus under the Sino-US trade war. The exchange rate against the US dollar has risen by nearly 6% so far this year, while the Australian dollar has risen by 8%, which is quite considerable. Although the central bank has adopted a loose attitude, the suppression of the exchange rate is still limited. Because the United States is watching whether Thailand has suspicion of trading exchange rates, the Thai baht has become a new safe haven tool.
. According to Nikkei, Japan's Mazda Automobile will re-evaluate its production layout in Thailand and may move some models back to Japan because the Thai baht appreciates too strongly against major currencies. Mazda's annual production capacity is about 135,000 vehicles in Thailand. Among them, CX-3 off-road vehicles mainly sold for export account for 25,000, and most of them are sold to Australia. It is expected that Mazda will transfer the production of the CX-3 to the Japanese Defense Bureau.
And this may not be an isolated case, many companies may have considered adjusting their strategies to avoid being impacted by the exchange rate gap. Relevant automotive consulting companies pointed out that GM has laid off employees in Thailand this year, and its production capacity has dropped by nearly 15% compared with the same period. Not only automobile manufacturers, but upstream supplier Japan's Xinji Iron has also reduced the utilization rate of Thailand's factories. Thailand, originally a major automobile manufacturing center in Southeast Asia, may face impact.
and the financial industry predicts that although the NTD rises more recently, the Thai baht's rise has not ended. Companies such as Toyota , Honda , Nissan , Isuzu and other companies may imitate Mazda and adjust their production lines in Thailand. Exported cars that originally exceeded one million vehicles per year will be affected, especially the weak auto market in China and other markets, which will further intensify the impact.
However, the strong rise in the Thai baht may not be a bad thing for local people. In recent years, Thailand has been in the dark cloud of stagnant inflation. If the authorities can make good use of the trade war this time, the strong Thai baht may be helpful to get rid of the economic trap and bring society back on track.
(First image source: Flickr/The NRMA CC BY 2.0)
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