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UPDATE 1-Thai August exports slump as strong baht adds to trade war woes

Fri, 20th Sep 2019 10:28

* Aug exports fall 4% y/y, even with gold boost

* Rice exports plunge 45% y/y, deepest fall since mid-2012

* Strong baht hurt farm shipments - official

* Baht is Asia's top performing currency this year(Adds detail, comments)

By Orathai Sriring and Satawasin Staporncharnchai

BANGKOK, Sept 20 (Reuters) - Thailand's exports plunged inAugust, as the strength of the baht hit its keycommodity shipments, adding to the woes caused by escalatingglobal trade tensions.

Exports, a key driver of Thai growth, fell 4% in August froma year earlier, worse than a forecast 2% fall, despite a 378%surge in gold exports. Excluding volatile gold, exports wouldhave slumped 9.8%.

In July, annual exports unexpectedly rose 4.28%, distortedby unusually high gold shipments.

Officials and exporters blamed the fall on the baht, Asia'sbest performing currency this year, which hit its highest levelsin over six years against the dollar.

"The baht makes our products more expensive than others',"commerce ministry official Pimchanok Vonkorporn told reporters.Rice exports were a particular concern, he said.

Thailand, the world's second biggest rice exporter, saw riceexports slumping 45% in August from a year earlier, the biggestcontraction since mid-2012. Shipments of tapioca slipped 25% andrubber dropped 7.2% last month.

The strong baht has been a major challenge for Thailand'sexport-reliant economy, which grew just 2.3%, the weakest annualpace in nearly five years, in the second quarter.

The government has repeatedly expressed its concern aboutthe baht's strength.

The currency has appreciated 6.8% against the dollar thisyear, sustained by Thailand's hefty current account surplus,which the state planning agency predicts at 5.9% of grossdomestic product this year.

In trade weighted terms, Thailand's nominal effectiveexchange rate was the highest since 1997.

"The baht is quite a big worry for us," said SupantMongkolsuthree, head of the Federation of Thai Industries.

The government has urged firms to exploit the strong baht byimporting machines and capital goods for investment.

But imports in August fell 14.6% from a year earlier, withelectrical machines down 17.6% and raw materials down 28%.Thailand had a trade surplus of $2.05 billion last month.

In August, annual exports of cars and car parts fell 12.6%,while electronics dropped 10.5%, also hit by the trade tensions.

Exports to China, Thailand's biggest market, fell 2.7% inAugust year-on-year, while those to the United States rose 5.8%.

Pimchanok said it would be difficult to achieve theministry's export growth target of 3%.

In the January-August period, exports dropped 2.19% from ayear earlier while imports declined 3.61%.($1 = 30.46 baht)

(Additional reporting by Kitiphong ThaichareonEditing by Nick Tattersall)

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