Concern over strong Thai baht grows

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baht-vs-dollarsThailand’s currency, the baht, has risen to its highest level against the US dollar since being floated in July 1997, stirring market concerns over consequences on export, investments, tourism and private sectors.

The baht stood at 29.16 against the dollar on March 20, having already gained around 5 per cent since the beginning of the year.

The country’s deputy prime minister and finance minister, Kittiratt Na-Ranong, has expressed his concern over the rising baht and said he had been worried about the currency’s strength since it had progressively appreciated from 31 baht against the US dollar since last year.

Kittiratt, who is responsible for fiscal policy, added he had been trying to get the Bank of Thailand to review its monetary policy, which had led to what he calls an “unnaturally strong baht” through a high policy interest rate. As a result, he was criticised and accused of interfering, he claimed.

He said that the central bank’s high key policy rate should be lowered to help improve the situation, even though a rate cut is not the only measure that could effectively stabilise the value of the Thai currency. However, if the Baht would strengthen further and approach the 28 baht per dollar threshold, immediate action should be taken.

Bank of Thailand Governor Prasarn Trairatvorakul said the strengthening of the baht reflected “foreign investors’ confidence in the Thai economy.” Positive factors include the recent upgrade of Thailand’s credit rating by Fitch Ratings to BBB+, a 19-month high in consumer confidence and possible increase in the central bank’s projection for economic growth in 2013.

However, businesses and industries fear negative impact of the strong currency on export performance, outbound investment, the property market and tourism.

The euro stood at 37.64 baht on March 20, down from a two-year peak of 45 baht in May 2011.

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Reading Time: 1 minute

Thailand’s currency, the baht, has risen to its highest level against the US dollar since being floated in July 1997, stirring market concerns over consequences on export, investments, tourism and private sectors.

Reading Time: 1 minute

baht-vs-dollarsThailand’s currency, the baht, has risen to its highest level against the US dollar since being floated in July 1997, stirring market concerns over consequences on export, investments, tourism and private sectors.

The baht stood at 29.16 against the dollar on March 20, having already gained around 5 per cent since the beginning of the year.

The country’s deputy prime minister and finance minister, Kittiratt Na-Ranong, has expressed his concern over the rising baht and said he had been worried about the currency’s strength since it had progressively appreciated from 31 baht against the US dollar since last year.

Kittiratt, who is responsible for fiscal policy, added he had been trying to get the Bank of Thailand to review its monetary policy, which had led to what he calls an “unnaturally strong baht” through a high policy interest rate. As a result, he was criticised and accused of interfering, he claimed.

He said that the central bank’s high key policy rate should be lowered to help improve the situation, even though a rate cut is not the only measure that could effectively stabilise the value of the Thai currency. However, if the Baht would strengthen further and approach the 28 baht per dollar threshold, immediate action should be taken.

Bank of Thailand Governor Prasarn Trairatvorakul said the strengthening of the baht reflected “foreign investors’ confidence in the Thai economy.” Positive factors include the recent upgrade of Thailand’s credit rating by Fitch Ratings to BBB+, a 19-month high in consumer confidence and possible increase in the central bank’s projection for economic growth in 2013.

However, businesses and industries fear negative impact of the strong currency on export performance, outbound investment, the property market and tourism.

The euro stood at 37.64 baht on March 20, down from a two-year peak of 45 baht in May 2011.

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