Thailand looks to rein in baht as it hits 6-year high

[BANGKOK] The Bank of Thailand is considering imposing additional measures to rein in the currency amid further gains in the baht to a six-year high and worries about economic growth.

The economy could be more sensitive to greater currency appreciation, the Bank of Thailand said in minutes of the Sept 25 monetary policy committee meeting published on Wednesday. This would be an "additional pressure" on softening domestic demand, particularly exported-related manufacturing and services, it said.

The committee "saw the need to closely monitor developments of exchange rates, capital flows, and impacts on the economy through various channels, as well as consider implementing additional measures at an appropriate timing if necessary," the central bank said.

The monetary authority took steps in July to curb short-term inflows, worried that a strengthening baht will add further pain to an export-reliant economy already being hit by the US-China trade war. The currency has gained more than 7 per cent against the dollar this year, making it the best performer in Asia.

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Additional currency measures could include continued relaxation of capital outflow regulations to encourage Thai residents to increase their portfolio investment abroad, the central bank said. It could also consider measures in collaboration with other organisations, "including efforts to stimulate investment to reduce the elevated current-account surplus."

The comments came on the same day the baht rose to as high as 30.334 per dollar, the strongest level since June 2013. It was up 0.3 per cent at 30.345 as of 10.33am in Bangkok.

The central bank left its benchmark interest rate unchanged in September after reducing it to 1.5 per cent in August.

The MPC "saw the need to preserve policy space in order to cushion against possible risks in the future and deemed it necessary to monitor the impacts of the policy rate cut and fiscal stimulus measures on the economy," according to the minutes. The panel will be "data-dependent" going forward, and will monitor growth, inflation and financial stability risks, it said.

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