The Bank of Thailand is monitoring the movement of the baht as it strengthens against the US dollar, in line with several major regional currencies, influenced by both internal and external factors.
Market expectations of a potential policy rate cut by the US Federal Reserve are pressuring the dollar, contributing to its depreciation against the baht, central bank governor Sethaput Suthiwartnarueput said on Wednesday.
“For Thailand, gold imports are another factor supporting a stronger baht compared with its regional peers,” he said on the sidelines of the Thailand Focus 2024 seminar hosted by the Stock Exchange of Thailand.
On a year-to-date basis, the baht, Singapore dollar and Malaysian ringgit have all strengthened against the dollar. The baht, which was trading at 34 to the dollar on Wednesday, has appreciated by 0.6% this year. The Singapore dollar is up by 1.4%, and the ringgit by 5.8%, according to Kasikorn Research Center.
In contrast, several regional currencies have weakened against the greenback this year including the Indonesian rupiah by 0.4%, the Philippine peso by 1.6% and the Vietnamese dong by 2.3%. The South Korean won and Taiwan dollar have depreciated by 3.4% and 4.3%, respectively.
Mr Sethaput said the central bank is prepared to intervene appropriately if the baht moves irregularly against the greenback.
The governor also said Thailand’s economy is gradually improving. GDP growth was 1.6% year-on-year in the first quarter, rising to 2.3% in the second.
For the second half of this year, the central bank expects growth to continue, albeit at a slower pace compared to 2023. It projects GDP growth rates of 2.6% for 2024 and 3% for 2025, returning to its potential.
Looking at monetary policy, the central bank is focusing more on future outlooks rather than solely on current data, according to the governor.
“On the matter of financial stability, the central bank will closely monitor financial credit conditions and deterioration in credit quality among lower-income groups, given the country’s high household debt levels. The bank also remains ready to adjust its monetary policy in line with the economic situation,” Mr Sethaput said.