Rapidly stronger baht worries Thai central bank governor, finance minister
Bank of Thailand (BoT) Governor Prasarn Trairatvorakul expressed concern last
week at the rapidly appreciating Thai currency during the past two days but
refused to commit regarding whether an intervention in the currency markets is
He said the stronger Thai baht compared to the US dollar is a consequence of
short-term foreign investment in Thai bonds and the stock market through
financial institutions - a signal of profit-taking by foreign investors.
The BoT governor warned foreign exchange investors to be extra cautious, giving
assurances that the central bank is armed with measures to stem the baht
appreciation which will be implemented when necessary.
The Thai currency is not that strong at the moment, he said. He refused to
disclose if the bank will intervene, but said that Thai currency should move in
tandem with the fundamentals and market mechanisms unless it has a negative
impact on the country.
“There is cost in every intervention. We are closely monitoring the situation.
It gains strength quite rapidly in the last two days,” he said. “We have the
mechanism but I’m not saying that we won’t use it. We will if it’s good for the
He indicated that the Thai baht’s movement, though significantly strong, is in
the same direction as Asian and regional currencies, adding that it is natural
that a currency is alternately strong and weak.
“The strengthening of Thai baht was less than regional currencies last year but
it is much stronger (compared to regional currencies) since early this year. It
reflects investors’ indifference to foreign risk factors,” he said.
Calling on the private sector to be prepared for possible fluctuations arising
from changing risk factors, Prasarn said BoT officials regularly meet with the
Federation of Thai Industries and Thai Chamber of Commerce given Thai exporters’
unequal capabilities in adjusting to the situation.
The BoT governor said the stronger Thai baht has been a boon to heavy machinery
imports for infrastructure development while foreign investments have increased
with a value of US$20 billion in direct investment and US$8-9 billion through
Deputy Prime Minister/Finance Minister Kittiratt Na-Ranong admitted that the
rapid strengthening of the baht, at the daily rate of Bt.20, is not a positive
sign and does not reflect the genuine economic situation.
He called on state agencies responsible for the country’s economy to ensure that
the Thai currency does not gain strength to an extent of impacting Thailand’s
export sector. (MCOT)
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