Thai Currency Soars, Central Bank to Rein

The Bank of Thailand is planning to impose measures to curb the Thai currency’s gains. The Thai baht has recently reached a six-year high.

As a result, the central bank worries that this could lead to economic growth problems.

Wednesday saw the release of the September 25 monetary policy meeting by the Bank of Thailand. According to it, the economy could be vulnerable to more currency strengthening.

Also, the rise in the baht’s value would mean “additional pressure” on softening domestic demand. It would particularly hit manufacturing and services that have links to exports.

Moreover, the comments came out as the baht soared to 30.334 per dollar, up 03%.

This level is its highest level since June 2013. So far this year, the currency has already risen 7% against the greenback.

In September, the Thai central bank left its rates on hold after slashing it down to 1.5% last August.

Steps to Control the Thai Currency 

According to the meeting minutes, the committee deemed it necessary to monitor exchange rates, capital flows, and economic performance.

Apart from that, it would also use “additional measures” if necessary.

In July, the bank took steps to rein in short-term inflows. It aimed to prevent the soaring currency from putting more substantial pressure on the economy, which already suffers from the US-China trade war.

In the future, the monetary authority may also relax capital inflow regulations. As a result, residents may try to increase their overseas portfolio investment.

The bank may also collaborate with other organizations to stimulate investment. The goal behind this would be to decrease the current-account surplus.

The minutes also said the bank agreed to be data-dependent as it pushes through the plans. It would monitor inflation, growth, and financial stability risks.