The government wants the Bank of Thailand (BoT) to temper a rally in the nation’s currency, which is threatening efforts to boost exports to balance a slump in tourism revenue, according to Finance Minister Arkhom Termpittayapaisith.
The BoT is “taking care” of the baht, Mr Arkhom told reporters in Bangkok on Wednesday, after the currency rallied to a 10-month high against the US dollar. The baht has surged 4.7% this quarter as foreign inflows into the nation’s stocks and bonds resumed and emerging market currencies rallied on optimism over the global economic outlook.
With the international borders closed to most visitors, Thailand is betting on a revival in trade to minimise the hit to the economy from the coronavirus pandemic. As exports have shown signs of revival, the government will focus on supporting its only source of external revenue, Mr Arkhom said.
“We are doing whatever we can to help exports,” said Mr Arkhom, who took over as the finance minister last month. “We have asked the central bank to manage the baht to be supportive for exports.”
The baht rose as much as 0.9% to 30.172 to a dollar on Wednesday, its highest intraday level since Jan 14, according to data compiled by Bloomberg. The currency has rebounded almost 9% from this year’s low in April and is close to wiping out its entire losses for the year.
Measured Moves
“The central bank is likely to lean against currency strength, but as the baht’s recent rally has broadly been in line with the rest of the region’s currencies, any moves to rein in gains are likely to be fairly measured,” Krystal Tan, an economist for Australia & New Zealand Banking Group, said in an email. The bank sees the baht at 30.90 to a dollar by year-end, she said.
Mr Arkhom said monetary and fiscal policies should be in sync to support the economy, which is expected to perform better than previously forecast this year on a pick-up in domestic consumption.
The government will extend beyond 2020 a co-payment programme meant to drive consumption, and will accelerate budget spending until the first quarter of next year, especially for infrastructure to sustain local demand, he said.