Strong Thai Baht hurting exporters
By SwizStick • Jul 26th, 2007 • Category: UncategorizedWhile some countries are enjoying the increased purchasing power of U.S. made goods thanks to the weaker dollar, export oriented economies with simultaneously weak import growth are suffering as the cost of their goods rises. Thailand is being especially hard hit, as the Baht has strengthened significantly against the dollar. Excerpt:
Thai Silp South East Asia, a Thai garment exporter with 5,000 workers, had been struggling financially ever since it lost one of its biggest customers last year. But last week, as the Thai baht surged against the dollar, Thai Silp’s owners seemed just to give up, locking their doors overnight and start-ling workers who turned up the next day to find the factory seemingly abandoned.
After angry workers blockaded the road to the airport - and under intense pressure from the government - Thai Silp reopened its doors a day later, with vague promises of state help to obtain fresh bank credit. But the shutdown raised growing concerns about the -vulnerability of Thailand’s labour-intensive export industries to the recent rapid appreciation of the baht to levels not seen since the 1997 onset of the Asian financial crisis.
After strengthening about 12 per cent against the dollar in 2006, the baht has risen a further 6 per cent this year, surging 3 per cent in July to hit 10-year highs.
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