The central bank announced on Monday that the Thai baht is experiencing a rapid appreciation, which is having an impact on tourism spending and exports. The bank also noted that the feeble dollar was contributing to the currency’s growth.
Yesterday, the Thai baht reached its greatest level in 31 months, trading at 32.235 against the US dollar. It is the second-best performer in the region, following Malaysia’s Ringgit, with a 5.8% year-to-date increase.
The Thai baht’s recent surge comes ahead of a meeting between the Finance Ministry and the Bank of Thailand this week, during which the currency’s performance and the country’s inflation target are anticipated to be discussed.
The meeting comes after the Finance Ministry has been pressuring the Central Bank for months to lower interest rates and harmonise with its budgetary strategy in order to boost the economy.
The central bank has so far rejected calls for a rate reduction, saying a drop was not required and maintaining rates at 2.50% for a fifth consecutive meeting last month. Next review of rates is on October 16.
According to associate governor Ms. Chayawadee Chai-anant, the central bank had controlled the volatility of the Thai baht, he told reporters this morning. She said that when exporters converted their profits back to baht, the higher baht was hurting them, adding that the higher Thai baht would also affect tourism expenditures.
According to the Bank of Thailand, there was a $2.4 billion trade account surplus in August as a result of exports rising 11.4% and imports rising 8.5% from the previous year. Due to increased exports of agricultural items to trading partners experiencing shortages, the current account surplus increased to $1.4 billion in August from a revised $0.1 billion surplus in July.
The economy expanded by 2.3% in the April–June quarter compared to the previous year, but economists expressed concern about the forecast due to the uncertainties surrounding fiscal policy. After a weak 1.9% increase the previous year, the Bank of Thailand has projected 2.6% economic growth for 2024, below regional counterparts.
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