The Finance Ministry is concerned with the steady appreciation of baht currency, fearing that if the trend is allowed to continue unchecked, Thailand’s economic expansion will be affected.
Finance permanent secretary Somchai Sajjapongse said Monday (Jan 22) that Finance Minister Apisak Tantiwonrawong had instructed officials concerned to mete out additional measures to prevent the baht to further appreciate to the extent that it will hurt Thai exports and economic growth.
As the first step, Mr Somchai said the Office of Public Debt Management was ordered to accelerate servicing of foreign debt before schedules although this measure would not help much because the amount of foreign debt was not substantial.
He went on saying that the Bank of Thailand was closely monitoring the situation. He also advised business operators, especially SMEs, to take steps to protect themselves from the risk of foreign exchange fluctuations.
Fiscal Policy Office director Mr Sovich Rojanavanich attributed the steady appreciation of the baht currency to the inflow of capital for investment in short-term debt instruments because of the attractive high interests whereas the Bank of Thailand has kept the policy rate pegged at 1.50 percent which is close to the US policy rate at 1.25 percent.
He anticipated that the policy rate might be adjusted up in March which would discourage the capital inflow and, hence, result in the weakening of baht currency.
Earlier, Bank of Thailand governor Veerathai Santiprabob attributed the steady baht appreciation mainly to US dollar depreciation which prompted in the inflow of short-term capital into Asian region, but the central bank did not detect any unusual in the baht appreciation.
He also maintained that the baht appreciation would not affect export growth because the main cause of the expansion of Thai exports was due to global economic recovery.