Thai baht hits new record high in two years
The Thai baht is one of the best-performing currencies in the region this year, rising about 5% against the dollar.
The Thai baht rose to 33.94 baht per USD, a record high in the past two years after the Bank of Thailand (BOT) decided not to take measures to stop the rise of the domestic currency.
Previously, in April, BOT imposed measures to scale back short-dated bond sales in an effort to lower short-term fund inflows, which strengthen the baht. The measures are still in place.
The Bank of Thailand remains worried about a strong baht and short-term capital inflows, the governor said to the Bangkok Post, as the currency traded near its highest against the dollar in more than 22 months.
On Monday, the central bank relaxed foreign exchange rules, letting more Thais buy securities overseas and commercial banks lend baht to non-residents for investment in Thailand and the Greater Mekong sub-region.
But the move failed to prevent the bath to continue on its rising trend. The baht edged up to 33.94 to the dollar Tuesday, marking its highest point in nearly two years. The local currency is one of the best-performing currencies in the region this year, rising about 5% against the dollar.
The Thai baht is one of the best-performing currencies in Asia, ranking fifth since 2016, following the won of the Republic of Korea (up 7.9 percent), Taiwan dollar (7.2 percent), Indian rupee (5.9 percent) and Malaysian ringgit (5.5 percent).
Past moves to try to weaken the baht have failed. Some business analysts believe Thais just prefer to keep their money at home and don’t like to invest in foreign assets.
On Wednesday the 7th of June The central bank has left interest rates unchanged despite a bout of deflation. A lack of inflationary pressures signals the benchmark will stay at 1.5 percent through the third quarter of next year, according to a Bloomberg survey.
In related news, the Bank of Ayudhya, one of the local leading banks, raised its baht forecast average by 34.50 baht per USD at the end of the year from 35.50 previously because of greater uncertainties, particularly the US monetary and trade policy.
According to Kasikornbank in Bangkok, Thailand had the world’s third largest surplus in 2016 – 11.3% of gross domestic product, trailing only Singapore and Taiwan.