Industrial sentiment drops as forex still a worry

The Thai Industries Sentiment Index (TISI) for April sagged for the fourth consecutive month to 92.9 points from 93.5 in March mainly because of the baht's appreciation and economic fluctuations overseas.

Federation of Thai Industries (FTI) chairman Payungsak Chartsutipol said yesterday that the April index was below 100 points, indicating negative sentiment, for the 10th month as business operators were still concerned about the baht, which has gained against the US dollar more strongly than other currencies in the region.

The strong baht directly affected the export sector, especially industries that rely on exports for at least half of their turnover.

Moreover, business operators are also worried about global economic volatility.

Local suppliers of raw materials are being affected as operators order from overseas instead, and the government has no measures yet to help domestic suppliers.

The TISI over the next three months is expected to drop to the lowest figure in 18 months as operators continue to worry about orders from overseas, which will affect sales revenue, production volumes and financial performance. Fuel prices and loan interest rates are other factors affecting the confidence index, Payungsak said.

Business operators have suggested that regulators take measures to deal with the strong baht, as the currency should not be stronger than others in Asean, especially of rival export countries.

The FTI urged the government to set up training courses for small and medium-sized enterprises on using hedging tools to diversify risk from foreign exchange, include finding sources of funds with the low interest rates to help increase their liquidity.

Surapong Paisitpattanapong, deputy chairman of the FTI and spokesman for the federation's Automotive Industry Club, said auto production in April was 170,438 units, up by 17.40 per cent year on year but down by 33.49 per cent from March because of fewer working days in April. Auto production in the first four months was 891,947 units, an increase of 38.39 per cent year on year.

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Article source: http://www.thethailandlinks.com/2013/05/19/industrial-sentiment-drops-as-forex-still-a-worry/