The rapid appreciation of the Thai baht is causing a lot of pressure on the Thai business community that depends on tourism and exports. They are calling for urgent intervention by the central bank.

The Thai currency, the baht, is set to see its biggest quarterly gain since the ASIA FINANCIAL crisis, which could hinder the recovery process of the country's key tourism and export industries. Data shows that since the end of June, the baht has surged 10% against the US dollar, reaching its highest level since the first quarter of 1998, prompting calls from the Thai tourism and hotel industry as well as chambers of commerce to ease the baht's appreciation. Thai Commerce Minister Pichai Naripthaphan, Deputy Finance Minister Paopoom Rojanasakul, and many representatives from Thai business sectors have urged the central bank this week to take emergency measures to control the currency exchange rate and curb its volatility. While the rise in the baht's exchange rate is mainly driven by the sharp drop in the US dollar before the Federal Reserve's rate cut on Wednesday, the baht's increase is significantly higher compared to the appreciation of currencies of Thailand's trading partners, which may lead buyers to seek cheaper import sources, according to the Thai Chamber of Commerce. The Tourism Authority of Thailand stated that although the number of foreign tourists remains strong, the strengthening local currency is squeezing shopping and hotel consumption, it's just a matter of time. An overly strong baht is also the latest challenge facing the new Prime Minister, Prayut Chan-o-cha, who has promised to stimulate GDP growth and reduce living costs in this Southeast Asia's second-largest economy. While Thailand's GDP growth lags behind neighboring countries such as Indonesia and the Philippines, its tourism and exports have been among the few bright spots in the Thai economy for years. As Thailand's exports account for nearly 60% of its GDP, Thai authorities have been exploring ways to sustain the recent growth in exports. Kriengkrai Thiennukul, chairman of the Thai Chamber of Commerce, told reporters on Wednesday that the significant appreciation of the baht has intensified the challenges faced by the local private sector, such as high production costs and influx of cheap imports from other countries. "The rapid appreciation of the baht is making it more difficult for exporters. They are already exhausted, making survival even more difficult. What we want is a stable baht, and assistance to deal with high financing costs," Kriengkrai said in an interview. Thai baht volatility surges Deputy Finance Minister Paopoom stated on Thursday that the baht exchange rate is highly volatile, making it difficult for exporters to conduct business. He emphasized the need to take measures to ensure that the baht is "neither too weak nor too strong, but most importantly, not too unstable." The Bank of Thailand has long stated that it will ensure that the exchange rate fluctuation does not harm local businesses. According to compiled data, the 3-month implied volatility of the baht against the US dollar is 9.14%, close to its highest level since January, higher than the average level of 7.96% this year. Statistics show that since this quarter, about $2.6 billion in foreign funds have been invested in Thai bonds and stocks, helping boost the baht and the country's major stock indices. Nattaporn Triratanasirikul, an economist at the Kasikorn Research Center in Bangkok, stated that the baht's appreciation may be one of the key factors that monetary policy makers at the Bank of Thailand will consider during the policy meeting on October 16. Economist Krystal Tan from the ANZ Banking Group stated: "In addition to concerns about asset quality and the uneven economic recovery, as well as the limited boost from recent relief measures introduced by the Thai government, these factors do increase the possibility of monetary policy easing in the coming months. It is difficult to rule out a rate cut by the end of the year." Deputy Chairman of the Tourism Authority of Thailand, Surawat Akaraworamat, stated that the significant rise in the baht exchange rate has not yet had a significant impact on tourists, but it may have a "psychological impact" on the shopping and consumption motivation of foreign tourists. Chairman of the Hotel Association of Thailand's southern branch, Suksit Suvunditkul, said: "If the Thai currency exchange rate remains strong in the long term, it may affect the number of foreign tourists in the future, as it will lead to higher tourism costs." Currently, the Thai government is striving to achieve the goal of receiving up to 36.7 million tourists this year and generating around 2 trillion baht (about $60 billion) in revenue. So far this year, the number of inbound tourists to Thailand has already reached nearly 25 million, a significant increase of 31% compared to the same period last year.