Thailand has no intention of using the exchange rate as a tool to gain an unfair trade advantage and competitiveness over trading partners, says the Bank of Thailand.
The central bank’s comments came following the issue of a US Treasury Department report that placed Thailand on the "monitoring list" of 10 countries labelled potential currency manipulators. The other nine countries on the list are China, Japan, South Korea, Germany, Italy, Singapore, Malaysia, Taiwan, and India.
The US Treasury Department issued its report titled “Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States” on Dec 16.
According to the report, Thailand has been put on the monitoring list for having a significant bilateral trade surplus with the US of over US$20 billion and a material current account surplus of more than 2% of GDP.
But Thailand did not fulfil the third criteria – foreign exchange intervention accounting for more than 2% of the country’s GDP.
“Thai authorities have conveyed credibly to Treasury that net purchases of foreign exchange over the 12 months through June 2020 were 1.8% of GDP. This figure is equivalent to almost $10 billion,” said the report.
“Thailand should continue to ensure that its foreign exchange policy does not resist appreciation of the baht in line with economic fundamentals in the context of large and durable external surpluses.”
To be labelled as a currency manipulator, countries must have at least a $20 billion-plus bilateral trade surplus with the US, foreign currency intervention exceeding 2% of GDP and a current account surplus exceeding 2% of GDP, Reuters reported.
The US Treasury Department report also names Switzerland and Vietnam as currency manipulators for fulfilling the three criteria listed in the report.
“At this stage the assessment is not expected to have a material impact on Thailand’s international trade, nor prospects for foreign direct investment into Thailand,” said Chantavarn Sucharitakul, assistant governor for the central bank's communications and corporate relations group.
“Similarly, such an assessment does not impede the ability of the Bank of Thailand to fulfil its mandate on macroeconomic policies to safeguard domestic stability."
The Bank of Thailand has been in close dialogue with the US administration to foster an understanding of Thailand’s macroeconomic and financial conditions, said Mrs Chantavarn.
Thailand’s central bank has also reiterated its commitment to exchange rate flexibility and has conducted two-way intervention only to ride out the volatility of the exchange rate, she said.
Finance Minister Arkhom Termpittayapaisith said there is no concern over the latest report by the US Treasury Department as the Bank of Thailand has a duty to manage foreign exchange movement.
“We still don’t know whether the US will roll out any measures to counter [Thailand] as they are still monitoring [the situation],” said Mr Arkhom.