BANGKOK (Reuters) – The keen appreciation of the Thai baht is hitting exporters and tourism spending, the central bank said on Monday, adding that the currency was gaining from a feeble dollar in the face of stronger regional currencies such as the yuan and yen.
On Monday, the baht hit a 31-month high at 32.235 against the dollar. It is up 5.8% year-to-date, the second-best performance in the region after the Malaysian Ringgit.
Exports and tourism are the main drivers of Southeast Asia’s second-largest economy.
The keen rise in the baht comes ahead of a meeting between the central bank and the Ministry of Finance this week, where they are expected to discuss the behavior of the Thai currency and the country’s inflation target.
The meeting, first reported by Reuters, came after months of government pressure on the BOT to cut interest rates and align with fiscal policies aimed at stimulating the economy.
The central bank has so far resisted calls for cuts, keeping interest rates unchanged at 2.50% for a fifth straight meeting last month and saying a cut was not necessary. The next rate review will take place on October 16.
The central bank managed the baht’s volatility, BOT deputy governor Chayawadee Chai-anant told reporters.
She said a stronger baht will have an impact on exporters when converting profits back to baht, adding that tourism spending will also be affected.
Exports in August rose 11.4% from a year earlier, while imports rose 8.5%, resulting in a trade account surplus of $2.4 billion, BOT said.
The current account surplus was $1.4 billion in August, compared with a revised surplus of $0.1 billion in July, driven by accelerated agricultural exports to trading partners that were struggling with shortages, the BOT said.
The economy grew at a faster pace – 2.3% in the quarter from April to June this year, but analysts said that uncertainty about fiscal policy was clouding the outlook.
BOT forecasts economic growth of 2.6% in 2024, following last year’s growth of 1.9%, which lags other regional countries.
