BANGKOK, Thailand – Thai central bank remains anxious about the baht’s strength and is ready to do further measures if necessary, with the deputy central bank governor saying that it’s prepared to rein in the resilient baht if needed on Tuesday.
The gains that the baht has previously recorded were largely boosted by the massive current account surplus in the country, instead of any speculation about the currency, according to Mathee Supapongse during a news briefing.
He said that they are ready with a lot of weapons, although there are still no speculations in the currency from foreign investors as of the moment. Mathee further stated that Thailand’s central bank continues to monitor the market keenly.
Previously in 2019, the baht has been considered as the best performing currency all over Asia after recording around a 9% increase against the US dollar. Its massive increase has increased the pressure on the economy amid the escalating trade tensions in the global market. It has also caused concerns in the market over the authorities introducing capital controls.
As of 5:10 GMT, the baht was trading around 30.24 against the US dollar.
Mathee has also said that the increase in the international reserves of Thailand suggests that the Bank of Thailand (BOT) has been successful in managing the baht by purchasing dollars. From its reserves in 2018, 2019 recorded an $18 billion increase to reach a total of $223 billion.
According to him, with the BOT intervening, the country’s reserves have successfully gained, which dragged the baht down.
However, Thailand’s central bank has been wary of the limitations and possible side effects of currency intervention. He said that it was largely because the central bank might be looking towards other countries’ trade protagonist measures.
The US Treasury stated on Monday that Thailand was near to triggering edges to be included in its lists of currency to monitor.
Quantitative easing was not appropriate for the country, said Mathee, citing the extremely high liquidity as the reason.
Meanwhile, he said that the central bank will add relax rules to stimulate investment from international investors to help alleviate the pressure that holds back the baht at the moment.
During the previous year, the BOT has already started introducing relax rules and methods against short-term inflows to encourage fund outflows.
While the appreciation in baht has distressed the country’s economy, especially the competitiveness of exports, it has provided relief for individuals, companies, and exporters who has foreign debt.
Meanwhile, the central bank forecasted that the second-largest economy in Southeast Asia is looking towards a 2.8% increase this year after around 2.5% gains in 2019.