The 10.4% appreciation of the baht, now at a 13-year high, is estimated to affect economic growth by 0.7%, says a Finance Ministry official.
Naris Chaiyasoot, director-general of the Fiscal Policy Office (FPO), said every one-baht appreciation against the US dollar impacts gross domestic product (GDP) by 0.3%.
Since the baht has escalated by 10%, or more than three baht, the impact on GDP so far should be at 1%.
However, that figure is based on the assumption that Thailand is the only country to see its currency appreciate.
"Given that Thailand is not the only country facing a rise in currency, the actual impact should be 0.7%. We project the GDP will be 6% this year instead of 7%," said Dr Naris.
He estimated that for next year, Thailand's GDP would be around 4-5%, assuming the baht stays at 29-31 to the dollar.
He disagreed with the private sector's request for the Bank of Thailand to cut interest rates to slow the baht's ascension, as he feels interest rates are not the only factor pushing the baht to rise.
The quantitative easing policy - in essence, the printing of more money - imposed by the US government is the main reason.
"Thailand not only provides higher interest rates, its economy is also thriving," said Dr Naris.
For the long term, Thailand should promote capital outflows by encouraging Thai companies to invest abroad and upgrade their production to offset lower import prices.
Discussing the "Tobin tax" or the taxing of capital inflows to discourage speculation, Dr Naris said the FPO is now considering the pros and cons of the idea since there are only a few countries that impose this measure. The efficiency of the measure would likely depend on each economy's fundamentals and structure as well as the management style, he added.
Other measures such as a cut in the policy rate from 1% would likely make a deep impact on the market and must be considered carefully, said Dr Naris.
The upside of a strengthening baht cannot be ignored, he added, especially increased tourists and inflows from this sector the past few months.
