The Thai gem and Jewellery industry is an export-oriented industry. Therefore foreign exchange rates are of vital importance to Thai jewel exporters. The daily Thai baht/US-Diollar exchange rate is the most important of all. As reported in the Bangkok post. Mr Sanan Angubolkul. Vice-chairman of the Thai Chamber of Commerce, said that the issue of most concern for Thai exporters is the stronger baht. Ms Sanan said having a currency stronger than those of competitors will affect Thailand's oveall export competiveness and expoerters profit margin.
Mr Sanan said most Thai manufacturers operate on thiner margins, now that income in baht terms has declined by more than 10% in the year to date. The private sector no longer has the courage to increase investment. Most manufacturers are reducing their stock and production capacity.
As reported by the Bloomberg news service, Tisco Financial Grouo senior investment strategist Komsorn Prakobphol said there are tough challenges to be faced "As long as the baht strengthens faster than regional peers". And Bloomberg reports Bank of Thailand governor Veerathai Santiprabphop as saying the baht's appreciation is a big concern for Thai exporters. An annual current account surplus astimated at around US $29 billion, and near-record foreign exchange reserves oof US $220 billion underpin the baht. A recent interest rate cut, and steps to curb some inflows, have failed to put a majordent in the baht.
In 2019, the baht has strengthened more than 6% against the US Dollar. The rise has hurt Thai exports and tourism; this has contributed to the weakest Thai economic expansion since 2014. The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) has called upon policymakers, the Bank of Thailand, and the Finance Ministry limit the baht's strength quickly to maintain Thailand's competitive edge. Therer is concern that the baht's gain relative to tradingg partners' currencies could affect the Thai economy to a significant degree.
Meanwhile, analysts at Citigroup are reported as saying gold prices may rally, in the next 2 years, to over US $2,000/oz. This would exceed the gold price record of US $1,921.17 set in 2011. The Citigroup analysts said they expect spot gold prices to trade stronger for longer, possibly breaching $2,000 an ounce and posting new cyclical highs at some point thenext year or two.
Gold hit a 6-year high in SEptember as central banks ease policy to address the slowdown in growth amid the US-China trade dispute.
Bloomiberg also reported on comments by another Citigroup analyst, Mr Barry Ehrlich, concerning diamonds as an investment. "Compared to gold, diamonds are an inferior store of wealth and therefore unlikely to benefit significantly from an investor flight from fiat currencies. " A weaker global and US economy would hurt demand. A healthy diamond market requires healthy middle-class consumers in the USA, and in China and India.