However, exporters said the weakened baht was of little help as Asian trade rivals had also benefited from weaker currencies against the dollar. Manufacturers of export goods had to pay more for imported raw materials. Farmers made little gain as they had sold most of their crops before the baht depreciated. 

"If the baht had dropped to 41 against the dollar early this year, their earnings would have been better.  But now it's too late," said Charuayporn Tantipipatpong, president of the Food Processors' Association. 

As well, Thai traders do not expect Americans to increase spending on imported products. Chavalit Nimla-or, a former president of the Thai Garment Manufacturers' Association, said public consumption spending in the United States was unlikely to increase sharply this year as the authorities were trying to take the heat out of the economy and avoid a crash. 

"Competition among countries exporting goods to the US is very tough. Even European countries face the same situation as us," Mr Chavalit said. He said Thai monetary authorities must keep a close watch on foreign exchange movements to prevent the baht from becoming too strong in relation to currencies of trade competitors.

"Whether the baht is weak or strong against the greenback is not the issue. The main point is that the movement must be in line with other Asian currencies," he said. The baht had gained against the Indonesian rupiah, which had depreciated by 25% against the dollar. That was not good for Thai rubber sales, said Choosit Ophaswong, president of the Thai Rubber Association. Thai planters had gained nothing as the intervention price for grade A rubber was fixed at 22 baht per kilogramme. 

Draco PCB Plc, a manufacturer of copper-clad laminate, said the company's costs had increased by at least 1%. To offset this, from today it had increased its prices by 6-10%. "Although we have already bought forward contracts to hedge exposures, ensuring that our business costs will remain stable, the banks have set maximum amounts for each client to hedge," said an executive of the company.

Sumrian Suthivong, managing director of Lucent Technologies Microelectronics Group, said the weakening baht would inevitably cause higher costs for the company. If the baht continued to weaken, the company would have to cut salaries to reduce costs. 

But the picture is different for companies with heavy foreign debt, such as Thai Telephone & Telecommunication Plc. The company's vice-president, Witit Sujjapong, said it had not been affected by the weak baht as it had hedged against exchange risks, as required by its debt-restructuring plan. 

However, Julpas Kruesopon, Samart Corporation Plc's vice-president, said the situation was more serious than in 1997 when the recession began. At that time, the global economy was in good shape and major powers could lend a helping hand. "Unlike at present, when superpowers face economic problems and can do little to help," he said. The situation was critical, particularly for companies that were restructuring their debts, he said.  "They might have to enter the restructuring process again, notably companies whose debts were due for repayment in the next two or three years.

"Sompong Tanchareonpol, president of the Plastics Industry Club of the Federation of Thai Industries, said most joint-venture companies that relied on imported content would bear the brunt of the weak baht. However, the situation might give local petrochemical producers a chance to sell more raw materials to local plastics makers. Mr Sompong said that businesses affected by the currency movement should focus on exports to offset an increase in import costs. 

Atchana Waikwamdee, senior director of the central bank's economic policy department, said the trend was basically a result of the appreciating dollar. Although regional currencies fell together, the higher cost of importing oil could depress consumption and economic recovery, she said. But the weak baht would not necessarily lead to high inflation, she said.

Thai stocks fell 2.4% to a 21-month low as markets across the region slipped on increasing fears of interest rate hikes by the US Federal Reserve later this month. The baht also lost ground against the US dollar, trading late at 41.315/395 against 41.275 on Friday. The Stock Exchange of Thailand closed yesterday at 284.67 points, down 6.93, in turnover worth 1.64 billion baht.