June 24, 2020 / 6:13 AM / 21 days ago

UPDATE 1-Thai May exports fall 22.5% y/y, but gold shipments surge

    * May export pace is weakest in over 10 years 
    * Gold shipments jump 735% y/y in May
    * Gold exports add to upward pressure on baht - cenbank

 (Adds details, context, gold traders' comments)
    By Orathai Sriring and Satawasin Staporncharnchai
    BANGKOK, June 24 (Reuters) - Thailand's exports in May
dropped by a bigger-than-expected 22.5% from a year earlier, the
weakest pace in more than 10 years, due to the impact of the
coronavirus pandemic, the commerce ministry said on Wednesday.
    The tumble compared with a Reuters poll forecast for a fall
of 6.4% in exports, a major driver of Thai growth, and came
after April's surprise 2.12% increase.
    "Exports may not fall much further, but could take a long
time to recover," ministry official Pimchanok Vonkorpon told a
briefing, adding shipments could fall 5% this year.
    In January-May, exports declined 3.71% year-on-year.
    The strength in the baht         , which was near a
five-month high against the U.S. dollar on Wednesday, was also a
risk that had not been reflected in May's export data, she said.
    However, gold shipments jumped 735% in May from a year
earlier. Excluding gold, exports declined 27.8% year-on-year.   
     The trend is likely to continue with benchmark gold prices
       near the highest in more than seven years on Wednesday.
Thais are heavily invested in gold and will sell whenever prices
go up, with the metal then exported.                 
    The Bank of Thailand (BOT) recently said gold exports had
added to upward pressure on the baht and it would consider steps
to reduce the impact.             
    The BOT, which is expected to announce new measures soon,
may further relax rules on fund outflows, limit some
gold-related activity or allow more trading options, analysts
and traders say.
    "As we discussed, the BOT wants to control gold traders'
forex transactions during night sessions," said Tanarat
Pasawongse, chief executive officer of Hua Seng Heng Group. "The
market is more volatile during such periods," he said.
    In November, the BOT said it was prepared to approve gold
futures trading in foreign currencies in the next phase, after
allowing investors to trade gold in foreign currencies and to
keep such proceeds in their foreign currency deposit accounts.
    See the November forex measures here here

 (Additional reporting by Kitiphong Thaichareon
Editing by Ed Davies)
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