Tuesday, May 7, 2013

Strengthening of Thai Baht Against S'pore Dollar in Early 2013

Mum commented that prices of Thai stuff at the supermarket have risen in prices. After the stock in warehouses are cleared, the new incoming stock are sold at high prices.

I check online & the Thai Baht has strengthen against S'pore Dollar.

Previous time such strengthening of the Baht is during 2008. Since beginning of this year the drop is like from 25 to 23 baht(getting less baht per S$ exchanged). That's a strengthening of around 8.7% for the Baht. It has rebound to 24 Baht - 4.1% strengthening of Baht

4.1% is a big blow to grocery business considering its low margin, very high turnover volume business model. Wal-Mart's net profit margin is 3.73% (see table compiled in Saving 25% of Take-Home Salary Beats Net Profit Margin of DOW).

In simple terms:
Same stuff from Thailand in Dec 2012 is now 4.1% more expensive due to stronger Thai Baht.
Grocery business net profit margin = 3.73%

Therefore must sell same Thai stuff more expensive else making a loss & wasting shelfspace.

For Thai workers working in S'pore, it is an instant pay cut.

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