The United States’ application of the minimised quantitative easing (QE) programme, China’s economic slowdown and the Thai Finance Ministry’s foreign capital control are major elements contribution to the depreciating baht, according to a senior central bank official said.
Pongpen Ruengvirayudh, deputy governor of the Bank of Thailand (BoT), said foreign capital inflows have gradually eased while the US Federal Reserve will scale down its QE measures – a signal of US economic revival and return of capital to dollar-trading markets.
China’s economy is on the downward trend from its 7.7 per cent growth in Q1, a phenomenon which, she said, will have an impact on Asian countries which rely heavily on exports to China.
Foreign investors have slashed their investment portfolios in Thailand’s bond market since last month, she said, adding that the Thai government has been mulling a curb on foreign capital inflows – a major factor that deterred investors.
The Thai currency moved slightly yesterday from Bt30.42/44 to Bt30.38/40 against the dollar. (MCOT online news)
Thailand’s Finance Ministry has announced a move to write a new regulation to control inflows and outflows of foreign capital, a senior cabinet member said. Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong told reporters after the cabinet meeting yesterday that present regulations limit only foreign capital outflows.
The BoT may simply inform the Finance Ministry if it decides to do so, he said. Any decision on the policy interest rate rests with the Monetary Policy Committee MPC, said Mr Kittiratt. He said the MPC, in deciding on the interest rate, should ensure that the baht would not be too strong compared to regional currencies in order to contribute to the country’s economic growth as targetted.
Thai baht becoming the region’s worst-hit currency in COVID pandemic
According to data from its tourism ministry as well as the World Bank, Thailand had only a little over 34,000 tourist arrivals as of May 2021, compared with over 39 million in 2019, before the pandemic. Fewer tourists also means lower demand for the Thai baht.
3 Reasons to Be Optimistic About the Baht Right Now
Probably one of the most important factors for the rise of the Baht is the continued weakness of the US dollar, which most experts agree is going to continue declining throughout the rest of the year.
The Thai Baht, our beleaguered currency, has had something of a difficult few years. Successful debt and inflation crises have eroded the value of the Baht numerous times, not least the events of 2015-16, which saw the Baht plunge to some of the lowest levels against the Dollar in history.(more…)
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