BoT shrugs off US currency watchlist tag
Central bank intervenes to steady the baht, not to gain a trade edge, says official
published : 17 Apr 2021 at 14:45
writer: Bloomberg News
The Bank of Thailand has responded to the US decision to keep the country on a currency manipulation watchlist by asserting that it has stepped into the market only to curb volatility in the baht.
The central bank is committed to exchange-rate flexibility, with “interventions limited only to curbing excessive volatility and rapid movements of the baht on both sides,” assistant governor Chantavarn Sucharitakul said in a statement Saturday.
“Thailand has never used the exchange rate as a tool to gain an unfair trade advantage,” she added.
Thailand was among 11 countries on the monitoring list announced on Friday by the US Treasury, as it meets two of the three relevant criteria. The country has a trade surplus of more than $20 billion with the US and a current account surplus in excess of 2% of gross domestic product.
The first foreign-exchange policy report of the Biden administration refrained from declaring any trading partner a manipulator, even though Switzerland, Taiwan and Vietnam met thresholds for the label.
Thailand remains on the US list in keeping with guidelines that require monitoring for two consecutive periods, the central bank statement said. Ms Chantavarn said she saw no impact on “business flows and activities between the private sector engaging in bilateral trade and investment with the US”.
“More importantly, the assessment does not impede the ability of the BoT to fulfill its mandate on implementing macroeconomic policies to safeguard domestic stability,” the statement said.
The baht rallied 5.8% against the US dollar in the fourth quarter of last year. That came despite the sharpest economic contraction in more than two decades as the pandemic devastated the country’s key growth drivers, tourism and exports.
The baht has tumbled 4.1% so far this year — the worst performance in Asia after the Japanese yen — as a rebound in Covid cases threatens to derail the recovery and delay a reopening to foreign visitors.
The central bank said it would “closely monitor developments of trade and current account balance,” noting that the latter was on a declining trend as a result of the dropoff in tourism.