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Central Bank Steps in to Influence Baht Exchange Rate

Central Bank Steps in to Influence Baht Exchange Rate

The Bank of Thailand has confirmed its intervention in the baht’s value, using it as a strategy to manage the currency’s strength against the US dollar.

On Monday, Chayawadee Chai-anant, assistant governor of the central bank’s corporate relations group, stated that the central bank has been actively intervening in the baht’s exchange rate to ensure that its fluctuations are in line with those of regional currencies.

The rise in the Bank of Thailand’s international reserves has been linked to its actions regarding the baht, as well as the depreciation of the dollar, she noted.

As per the central bank’s data, gross international reserves reached US$235.6 billion in August, an increase from $230.6 billion in July and $224 billion in June.

Additionally, net international reserves climbed to $262 billion in August, up from $258 billion in July and $252.6 billion in June.

Ms. Chayawadee emphasized that while the baht’s appreciation against the dollar positions it as a prominent currency in the region, it still lags behind the Malaysian ringgit.

She acknowledged that the pace of the baht’s strengthening has outstripped initial expectations. The central bank is diligently monitoring the currency’s movements to mitigate any adverse impacts on the broader economy.

According to Ms. Chayawadee, the baht’s appreciation against the dollar has different implications for domestic businesses. For instance, exporters may see a reduction in income due to foreign exchange conversions, particularly those using national foreign exchange hedging.

However, she indicated that a stronger baht is not expected to negatively affect the tourism sector in the last quarter of this year. During this peak season, international travelers typically anticipate a stronger baht against the dollar, allowing for better budget management while in Thailand.

“The stronger baht against the dollar is not likely to deter foreign tourist arrivals in the final quarter of this year. Notably, key visitors to Thailand, including those from China, Malaysia, and Japan, have also seen their currencies appreciate against the dollar,” she stated.

The central bank reported on Monday that the number of foreign tourists in August, after seasonal adjustment, reached 3 million, representing a slight decline of 0.1% from the previous month. Despite this, tourist spending in August remained stable compared to July. However, the number of foreign travelers in September is showing signs of improvement compared to August.

In August, the Bank of Thailand reported that overall economic activity in Thailand remained consistent with the previous month. Nonetheless, there was a decline in foreign tourists, particularly from China and Malaysia, following a surge in arrivals in earlier months.

Conversely, there was an uptick in tourists from certain countries, such as Japan and India. According to the central bank, tourism revenue, after seasonal adjustment, remained steady from the previous month, primarily due to increased spending per visit.

According to Kasikorn Research Center, the baht strengthened to 32.17 baht per dollar during Monday’s trading, reaching its highest level in 31 months.

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