Thai central bank cuts interest rate
The Bank of Thailand in its monetary policy committee meting on May 29 cut the benchmark interest rate by a quarter of a percentage point to 2.50 per cent from 2.75 per cent. The move was preceded by concerns about a strong baht that could hamper economic growth and export earnings and pressure by industry groups and the Thai finance minister to curb the baht’s appreciation.
The central bank also said it is ready to implement capital controls if necessary to contain the strength of Thailand’s currency. The move provides some relief for exporters struggling with the rise of the baht.
Many economists had predicted a modest rate cut after Thailand’s economy contracted by a seasonally adjusted 2.2 per cent in the first three months of 2013 compared to the previous quarter.
Finance Minister Kittiratt Na-Ranong has pressed repeatedly for sharper interest rate cuts.
Possible measures for capital controls include requiring foreigners to hedge some of their investments in baht-denominated assets and curtailing short-term investments in government bonds, which have attracted a surge of overseas investment this year after Japan began loosening its own monetary policy to drive down the value of the yen.
The baht weakened after the central bank’s decision and hovered around 30.15 to the US dollar on the evening of May 29 after the news became public. The baht also lost against other major currencies, for example the euro whose value against the baht rose above 39:1 for the first time since February 2013.
The Bank of Thailand in its monetary policy committee meting on May 29 cut the benchmark interest rate by a quarter of a percentage point to 2.50 per cent from 2.75 per cent. The move was preceded by concerns about a strong baht that could hamper economic growth and export earnings and pressure by industry groups and the Thai finance minister to curb the baht's appreciation. The central bank also said it is ready to implement capital controls if necessary to contain the strength of Thailand's currency. The move provides some relief for exporters struggling with the rise of the...
The Bank of Thailand in its monetary policy committee meting on May 29 cut the benchmark interest rate by a quarter of a percentage point to 2.50 per cent from 2.75 per cent. The move was preceded by concerns about a strong baht that could hamper economic growth and export earnings and pressure by industry groups and the Thai finance minister to curb the baht’s appreciation.
The central bank also said it is ready to implement capital controls if necessary to contain the strength of Thailand’s currency. The move provides some relief for exporters struggling with the rise of the baht.
Many economists had predicted a modest rate cut after Thailand’s economy contracted by a seasonally adjusted 2.2 per cent in the first three months of 2013 compared to the previous quarter.
Finance Minister Kittiratt Na-Ranong has pressed repeatedly for sharper interest rate cuts.
Possible measures for capital controls include requiring foreigners to hedge some of their investments in baht-denominated assets and curtailing short-term investments in government bonds, which have attracted a surge of overseas investment this year after Japan began loosening its own monetary policy to drive down the value of the yen.
The baht weakened after the central bank’s decision and hovered around 30.15 to the US dollar on the evening of May 29 after the news became public. The baht also lost against other major currencies, for example the euro whose value against the baht rose above 39:1 for the first time since February 2013.
