Persistent Baht Strength Squeezes Thai Exporters
Thailand's baht continues to show persistent strength against regional currencies and the euro, complicating pricing and eroding margins for exporters. Kiatnakin Phatra Securities finds that structural forces, not just trade balances, are underpinning the currency's resilience. The baht is currently trading at approximately 0.0271 EUR, with technical analysis pointing to continued sideways movement or further gains.
- The Thai Rice Exporters Association has urged government action, noting that for every one-baht appreciation against the US dollar, the price of Thai rice for export increases by $15 per tonne. The baht is currently trading 10-20% stronger than the currencies of competing nations like India and Vietnam, significantly impacting price competitiveness. - India, the world's largest rice exporter, officially lifted its ban on non-basmati white rice exports on September 28, 2024, and removed the final barrier on 100% broken rice exports on March 7, 2025. This full re-entry into the global market is increasing supply and has triggered a downward trend in global rice prices, intensifying pressure on Thai exporters. - The European market for organic rice is projected to grow by 12% annually, with the overall organic food market expected to reach €50 billion. A survey of European retailers and brands revealed that over 90% consider sustainable sourcing a priority, with a third expecting 70% of their rice to be from verified sustainable sources by 2025. - Exporters targeting the European Union must comply with the General Food Law Regulation (EC) No. 178/2002, which mandates comprehensive traceability throughout the supply chain to allow for rapid product withdrawals if necessary. Specific products, like Basmati rice, require authenticity certificates issued by a competent body in the exporting country to qualify for import. - In response to market pressures, Thailand's Ministry of Commerce is actively promoting exports, recently leading a delegation to the Philippines that resulted in the signing of nine MOUs between Thai exporters and Philippine importers for 130,000 tons of rice. - While the strong baht presents challenges, demand for premium and specialty rice varieties is growing in key markets. In Europe, consumption of aromatic rice like jasmine is rising, and the Asia-Pacific region is seeing increased demand for premium, organic, and processed rice due to urbanization and rising incomes. - Facing increased competition, Vietnam is focusing its strategy on developing fragrant and high-quality rice varieties, gradually reducing its reliance on lower-quality grains to compete on value rather than just price. - Due to the strong baht and renewed competition, Thailand's rice exports are projected to decline to between 7 and 7.5 million metric tons in 2025, down from previous years.
