Thailand on verge of US watch list as trade surplus hits US$20b

Bangkok

THAILAND'S 12-month trade surplus with the US exceeded US$20 billion, raising the chances that it will be added to the US Treasury's watch list of currency manipulators.

The surplus reached US$20.05 billion in the 12 months till November, according to US Census Bureau data released on Monday in Washington. That exceeds the US$20 billion limit that the US Treasury has set for bilateral goods trade deficits, and means that Thailand now violates two of the three criteria that the Treasury uses to add a country to the watch list.

The latest development increases scrutiny on Thailand's currency policy at a time when officials are scrambling to rein in the baht's almost 6 per cent gain against the US dollar over the past year, the fastest appreciation among major Asian currencies. The US is Thailand's third-biggest trading partner, with total trade of US$47 billion in 2018.

The US Treasury publishes a twice-yearly report designating countries of concern for currency manipulation if it meets two of three criteria: a trade surplus with the US of at least US$20 billion; a current account surplus of at least 2 per cent of gross domestic product (GDP); persistent, one-sided intervention in the currency equivalent to 2 per cent of GDP in six months of a year.

Bank of Thailand governor Veerathai Santiprabhob said in a Bloomberg Television interview on Wednesday that Thailand is engaged in a "close dialogue" with US officials about Thailand's performance on those measures. He said Thailand had yet to verify a breach of the US$20 billion trade surplus threshold with its own official data.

Mr Veerathai said the baht's move in 2019 should show that "no one should consider Thailand as one that has tried to manipulate" the currency to gain an export advantage. He cited Thailand's progress in trimming its current account surplus over the past few years, including efforts to boost both public and private investment.

In the May 2019 report, three South-east Asian nations - Singapore, Malaysia and Vietnam - were cited for the first time with two violations each, while Thailand was charged with one: for its current account surplus.

Thailand's current account surplus has stayed above 2 per cent of GDP for every quarter since the end of 2014, according to Bloomberg calculations. BLOOMBERG