Thai Central Bank Says Further Baht Gains May Derail Recovery
By Lilian Karunungan Suttinee Yuvejwattana Yumi Teso
August 22, 2016 — 11:00 AM AEST
Thailand’s central bank is concerned further appreciation of the baht will hurt exporters and damages the nation’s economic recovery.
The currency advanced to the strongest level in 13 months last week as overseas investors boosted their holdings of the country’s stocks and bonds this year. Exports have contracted in 16 of the past 18 months, prompting Prime Minister Prayuth Chan-Ocha to increase spending to counter the slump. The currency has also rallied as investor confidence was bolstered by the peaceful approval of a new constitution in an Aug. 7 referendum.
“To date, the appreciation of the baht might have dampened the cash flows of Thai exporters,” Bank of Thailand Assistant Governor of Financial Markets Chantavarn Sucharitakul, said in an e-mail interview. “Further strength in the baht might also derail the recovery of the Thai economy – a concern which the Bank of Thailand has to monitor closely.”
The baht was at 34.71 per dollar as of 8:55 a.m. in Bangkok, having gained 3.9 percent this year. It appreciated to 34.50 on Aug. 19, the strongest since July 2015.
Funds based overseas boosted their holdings of the nation’s stocks and bonds by $13.3 billion this year, according to exchange data.