The Bank of Thailand says it is not seeing unusual movements in capital flows and is closely monitoring the baht, which has slid to its weakest level against the dollar in more than 16 years.
Assistant governor Chayawadee Chai-Anant cited US dollar strength as the main reason for the baht’s recent volatility, amid uncertainties in the global financial market, according to a statement from the central bank on Saturday.
US inflation may push the Federal Reserve to further raise interest rates, Ms Chayawadee said. China’s continuing zero-Covid policy may also affect the recovery of the Thai tourism industry, the country’s main growth driver, she added.
The central bank comments come as the baht continued to lose value against the US dollar, falling to 38.37 baht on Friday and hovering at levels last seen in 2006.
The weakness in the currency may linger through 2024, Finance Minister Arkhom Tempittapaisith said earlier this week. But Thailand remains a “value for money” destination for tourists and the central bank need not worry about capital outflows as much as other economies, he said.
Thailand is currently seeing a net inflow of capital, Ms Chayawadee said in Saturday’s statement. Foreign investors held about 110 billion baht in net assets this year as of Oct 20. On the Stock Exchange of Thailand, foreign investors have been net purchasers of 146 billion baht worth of Thai shares so far this year. They have been net sellers of Thai bonds, at about 30 billion baht.
The assistant governor urged the private sector to manage risks to lessen the impact of financial volatility while uncertainties remained high.