Thai central bank undertakes ‘heavy’ baht intervention to ease volatility, chief says  

THAILAND’S central bank has aggressively acted to ease volatility in the baht the central bank chief said on Friday Dec 26), with the currency surging to its highest level against the dollar in more than four years.

The baht has gained 10.3 per cent against the dollar so far this year to become Asia’s second-best performing currency.

The baht’s strength has added to the problems in South-east Asia’s second-largest economy, which has been struggling with US tariffs, high household debt, a border conflict with Cambodia and political uncertainty ahead of elections in early February.

“Although we have intervened heavily in the latter half of the year, our efforts could only mitigate fluctuations,” governor Vitai Ratanakorn told reporters.

“We want to reduce volatility. We do not want the baht to strengthen to the point where it hurts exporters and the economy,” he said.

The central bank has not set a specific target for the baht’s value and cannot manipulate the currency due to international agreements,” Vitai said.

The baht’s recent strength stems from a weaker dollar, capital inflows and Thailand’s higher-than-expected current account surplus, he said.

On Friday, the central bank initiated measures to strengthen scrutiny over capital inflows exceeding US$200,000, Vitai said, adding that banks were now required to follow stricter review processes.

“This is the first time we are checking the purposes and documentation of such inflows,” Vitai said.

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The move follows measures to control gold trading, which the central bank has blamed for helping to drive up the baht.

On Friday, the central bank also announced a loan guarantee scheme expected to increase new credit by 100 billion baht (S$4.1 billion) over the next one to two years. The scheme, which will begin in January 2026, will offer guarantees for loans of up to 100 million baht for targeted small- and medium-sized businesses, and up to 150 million baht for corporates.

Vitai reiterated that lowering interest rates would not solve structural problems.

Last week, the central bank cut its key interest rate for the fifth time since October 2024, with rates down by a total of 125 basis points over the period. REUTERS