The Finance Minister of Thailand, Kittiratt Na Ranong has stated that the Central Bank of Thailand should do away with any sort of intervention which fights the market forces to stem the major currency, Baht’s appreciation. Kittiratt added that he will never encourage the Central Bank to indulge into such activities of trading against the market determined rate unless it’s a part of the weekly or daily stability. He commented that even if such things are done, the impact on the Baht will not be significant and changes of some few basis points will occur only.
Incidentally, on this week, Baht has experienced several losses after reaching its highest figures in last 17 months. The investors are speculating that the Central Bank will soon take actions to prevent any further gains. Incidentally, the export growth of Thailand of last month was worse than the initial estimates and that made many concerned over the appreciation of Baht. Incidentally, an increased value of Baht is definitely a warning signal for the export industry of Thailand, which makes almost two-thirds of Thailand economy.
Incidentally, Thailand is one of those emerging markets which are seeking to stem the inflows because of monetary easing policy of different developed countries such as Japan and United States. Such a monetary easing policy causes greater demand of the higher yielding assets of these emerging markets. The Prime Minister of Thailand, Yingluck Shinawatra, incidentally, took a few important steps this month, thereby adding to the stimulus measures which are primarily aimed to increase the purchasing power of the country and at the same time, reduce the reliance on exports for growth.
The policy makers of Thailand are believed to be considering a lot of options and lower interest rates is one of them. However, as Kittiratt says, this move can turn out to be a double edged sword for Thai economy as this will decrease the inflows, however, will have its detrimental effects on the stability.
Kittiratt believes that any measurement which is not natural or sustainable will not be beneficial on the longer run. According to analysts, Kittiratt’s statement has reduced the pressure from the Bank of Thailand officials and many believe that the Government will now be focusing more on increasing the domestic demand. Baht, incidentally, has increased by 2.7% against USD in December.