The continuing strengthening of the baht could erode the export sector's trade competitiveness, Finance Minister Kittiratt Na-Ranong said on Thursday.
"It would be good if the Thai currency were weaker than the current level," Finance Minister Kittiratt Na-Ranong said on Thursday. (Photo by Kosol Nakachol)
Even though current economic growth is driven by other mobilisers, such as the increase in domestic consumption and private and government investments, the export sector still plays a crucial role in the system, the minister said.
If export expansion is well maintained, it boosts the country’s economic potential. For this reason the value of the Thai currency should be curbed at suitable levels. It should not be too strong, he added.
Mr Kittiratt, who is responsible for fiscal policy, said he had been trying to get the Bank of Thailand to review its monetary policy, which had led to an unnaturally strong baht and high policy interest rate. As a result, he was criticised and accused of interfering in the workings of the central bank and monetary policy.
He said he had urged the central bank to oversee the baht's movement ever since its value was 31 baht to the US dollar. His aim was to see a stabilisation of the currency's value, not too strong or too weak, to prevent it from affecting exports.
“The baht is very strong now. I don’t mean that its value should be weakened to 31 baht as before. I just want the BoT to review its monetary policy.
"It would be good if the Thai currency were weaker than the current level,” said Mr Kittiratt, also deputy prime minister for economic matters.
If the baht becomes stronger, it would affect export potential. It was therefore necessary to stabilise its value, he said.
The Ministry of Finance had been refraining from creating any impact on exchange rates. On the matter of government foreign debt, the ministry had asked for approval from the cabinet to make repayment before the due dates. This would help prevent the baht getting any stronger, he said.
The minister said the government is planning to offer inflation linked bonds to Thai investors, but a large number of foreign investors were interested in buying it, because of its high rate of investment return, which is based on the central bank’s key policy rate.
He asked the BoT to review its stance on monetary policy and follow his suggestions.