The US dollar has significantly strengthened against other currencies while the baht weakened to Bt32.33-32.35 against the dollar at the opening today – a decline in line with other currencies in the region.

Roong Mallikamas, Bank of Thailand spokesperson, said the Fed’s QE reduction to US$55 billion a month was predictable and it will pose only a slight impact on the global money market.

The US Federal Reserve has decided to cut its quantitative easing (QE) volume by US$10 billion, effective in April – a move that consequently weakens the baht, a senior central bank official said today.

The Fed’s statement has signalled a policy interest rate adjustment after the QE termination, and interest rates will possibly be higher in the second quarter of next year.   Dr Roong said that the global interest rates are on a rising trend, contributing to funds flowing back to the US dollar in the short term.   She said the Fed’s decision to downsize QE indicated strengthened US economy – a positive sign for the global and Thai economies.

Thailand’s economic growth has plunged to less than 3 per cent which is far below the potential growth of 4-5 per cent, mainly due to disappointing consumption and investment given the months-long political turmoil.

She said the investment sector will have to introduce new manufacturing technology to keep pace with advanced global technology, or it would lose its opportunity.   The central bank needs to continue relaxed money policy to stimulate the economy, she said. (MCOT online news)

Moody’s Investors Service says that while it sees a negative impact on growth, at this point in time Thailand’s sovereign credit profile remains consistent with its Baa1 rating level and stable outlook. Moody’s expects the political situation to stabilize by the second half of 2014, and assumes that elections for a new government will be completed and a government formed, likely by July as the political schedule is currently unfolding. “We also expect the on-going protests to remain concentrated in certain areas in Bangkok and do not foresee significant physical disruptions to vital economic sectors, such as manufacturing or tourism,” says Steffen Dyck, a Moody’s Assistant Vice President and Analyst. Dyck was speaking on the release of a new Credit Focus on the Government of Thailand.