The Bank of Thailand's Monetary Policy Committee (MPC) on Tuesday issued a clear message that it wants to help stem the appreciation of the baht by discouraging foreign capital inflows, rather than cutting interest rates.
The increased value of the baht is a threat to small- and medium-sized exporters and is also bad for tourism amid weak global demand. In theory, the stronger local currency should present opportunities for Thai companies to buy cheaper imports and encourage tourism businesses to improve the quality of their products and services. But in reality, most firms have yet to adjust to the significant currency appreciation.
Since the start of the year, the baht has gained more than 6% against the US dollar, making it one of the fastest appreciating currencies in the world, on par with the Mexican peso.
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