Sep. 11--Thailand should pursue a weak-currency strategy to prop up exports as global economic conditions remain volatile, economists say.

Narongchai Akrasanee, the chairman of the Export-Import Bank, said a depreciation of one baht against the US dollar would produce an additional 150 billion baht per year in export revenues.

More aggressive currency policies would help the economy recover faster and are appropriate as inflationary pressure remained low, he said.

Such a strategy would "generate higher income for the country under the current unusual economic situation", he said.

"The Thai baht has more room to depreciate against the dollar even considering other regional currencies."

The baht, which has hovered around 34 to the dollar in recent days, has been generally stable against the greenback this year.

The central bank has maintained the Thai currency remains stable relative to key trading competitors, and that intervention is only to smooth volatility rather than manage the baht's value.

Most analysts agree the baht is likely to appreciate going forward, due in part to a trade surplus, capital inflows and the longer-term trend pointing to a weaker US dollar.

Boontuck Wungcharoen, chief executive of TMB Bank, said global trade was likely to fall by 12 percent to 13 percent this year compared with last year.

Thai exports fell 23.9 percent year-on-year for the first seven months, with imports declining 34.9 percent.

Local businesses and exporters should prepare for continued market volatility over the next three to five years, said Mr Boontuck, speaking at a conference on global economic trends.

The global recession has had a direct impact on demand and Thailand's manufacturing sector, he said.

Capacity utilisation now stood at about 60 percent, compared with 50 percent after the 1997 crisis and as high as 90 percent during the boom years of the 1990s.

At a separate conference, economist Olarn Chaipravat echoed the view that a weaker baht would help speed recovery.

Dr Olarn, a former banker and former deputy prime minister, said the central bank should intervene aggressively to help push the baht downward.

A weaker baht would help make local products cheaper and more competitive in the global market, he said, resulting in added export revenues and supporting economic recovery.

The baht should be trading at 37 to the dollar in the second half, he said, a rate that would generate an additional 247 billion baht in export revenues if compared with the current rate of 34 to the greenback.

While a weaker baht would increase the cost of imports, the overall gain for the economy would remain positive.

Authorities could also mitigate the impact of a weak baht on imported fuel costs by cutting tax rates, Dr Olarn said.

Thailand's gross domestic product peaked at 9 trillion baht in September 2008, just before the economic crisis. Dr Olarn said that while the local economy had likely reached bottom, a recovery would be protracted without more aggressive measures.

He said the government was taking the right steps by increasing fiscal spending and setting lending targets for state banks to promote investment.

Closer coordination among government ministries would support industrial sector growth, said Suvit Maesincee, director of the Sasin Institute for Global Affairs.

"We are living in a world where more factors need to be considered than the real sector's performance alone. Other elements such as social, environmental and creative ... need to be integrated into government policies," he said.

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