The Bank of Thailand (BoT) has reaffirmed its commitment to managing the appreciation of the baht against the US dollar to mitigate its effects on the real economy.
Pimpan Charoenkwan, the central bank’s assistant governor for financial market operations, emphasized that the bank is closely monitoring the baht’s performance against the dollar, focusing on both its appreciation and volatility.
“The central bank is ready to intervene and regulate the baht’s fluctuations when it experiences irregular movements, in order to lessen the impact on the real sector,” she stated.
This year, the baht has strengthened against the dollar, establishing itself as one of the top-performing currencies in the region. According to the central bank, external factors are the main drivers behind the baht’s robust performance.
Ms. Pimpan highlighted that a weakening dollar, largely influenced by the US Federal Reserve’s recent interest rate cuts, has greatly contributed to the baht’s increase in value. Additionally, the market anticipates that the Fed may implement more interest rate reductions than previously expected.
The yuan has also gained strength against the dollar following the introduction of an economic stimulus package by Beijing, which has positively impacted regional currencies, she noted.
Internal factors, such as increased foreign capital inflows and rising gold prices, have also played a role in bolstering the baht against the greenback, according to the central bank.
Ms. Pimpan noted that foreign capital has been flowing into Thailand’s stock and bond markets since August.
Global gold prices recently reached a record high of US$2,670 per ounce, further supporting the baht’s appreciation as local traders ramped up gold imports.
Year-to-date, the baht has emerged as the second strongest currency in the region, appreciating 3.8% against the dollar, trailing only the Malaysian ringgit, which has increased by 11%.
In comparison, the Singapore dollar and Indonesian rupiah have appreciated by 2.2% and 1.5%, respectively, according to central bank data.
Conversely, the Philippine peso, South Korean won, and Taiwan dollar have seen depreciation of 1.3%, 3.5%, and 3.9%, respectively, against the US dollar this year.
Yesterday, the baht opened at 32.60 per dollar, reaching its strongest level in 30 months, up from Tuesday’s closing value of 32.85. During the trading day, it fluctuated between 32.57 and 32.69.
Kasikornbank (KBank) noted that the US dollar weakened significantly following lower-than-expected US consumer confidence data for September, leading markets to predict a more substantial policy rate cut from the Fed.
Moreover, China’s extensive stimulus package surprised some markets and has further strengthened the yuan, which, in turn, supported other regional currencies, including the baht, according to the bank.
Considering these dynamics, KBank anticipates that the baht will continue to strengthen, potentially reaching 32.50 per dollar.
