Kittiratt: No action to curb baht

It is not necessary for the Ministry of Finance to act to curb the persistent strengthening of the baht at this stage, Finance Minister Kittiratt Na-Ranong said on Wednesday.

Kittiratt Na-Ranong (Photo by Patipat Janthong)

The minister said he will discuss the state of the currency with the Bank of Thailand (BoT) governor at the meeting of economic ministers later today.

The baht has appreciated rapidly over the past two days.

Any use of unnatural special measures to deal with the baht's fluctuation could cause panic and would erode confidence in Thailand in the international community, Mr Kittiratt said.

He personally though that the central bank’s unnaturally high key policy rate should be lowered to help improve the situation, even though a rate cut is not the only measure that could effectively stabilise the value of the Thai currency.

Mr Kittiratt said he was not trying to interfere in the central bank's handling of monetary policy, but just expressing his concern in the hope that the BoT and the government could work closely together to ensure the country’s stability.

Mr Kittiratt, who as deputy prime minister for economic matters handles fiscal policy, said the cabinet meeting on Tuesday approved the draft two-trillion-baht infrastructure development loan bill.

The government’s planned megaprojects will use loans raised from domestic financial institutions and also lead to the import of capital goods that will help curb the foreign exchange inflow, he said.

In the meantime, the investment programme would partly help stabilise exchange rates, he added.

The problem is it would take time to show fruitful results because the investment and procurement process could not begin until late this year or early next year. Therefore, a close watch must be kept on the current foreign direct investment inflow, the minister said.

The baht currency this morning stood at 29.14/20 baht to the US dollar, the strongest rate in 16 years. Since the beginning of the year, the baht has strengthened by about 5%, the strongest in the region.

Related search: monetary policy, baht, foreign exchange rates, Kittiratt Na-Ranong

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