Tue, August 16, 2022

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BOT told to watch baht closely as it hits lowest in five years


The Finance Ministry has told the Bank of Thailand (BOT) to closely monitor the weakening baht, as a continuous slide could trigger outflow of capital.

On Wednesday, the baht opened at 35.94 to the US dollar, the weakest in five years, falling from Tuesday’s close of 35.80.

“There are many factors contributing to the baht’s weakening, including the strengthening of the US dollar and Chinese yuan, as well as the increase in policy rate by the US Federal Reserve,” Finance Minister Arkhom Termpittayapaisith said on Wednesday. “The ministry has ordered the BOT to follow the situation closely, especially regarding capital outflow.”

Arkhom said that he believed the weakening of the baht would have only a minor impact on Thailand’s bond market, as foreign investors still have high confidence in the market, and the weakening of a currency is a normal phenomenon in capital markets.

BOT told to watch baht closely as it hits lowest in five years

Arkhom also said that the current inflation rate at 7.66 per cent, the highest in 13 years, is considered in the "low level" compared to developed countries. “The government has already issued measures for product and energy price control to help affected groups, and will discuss with the Ministry of Energy and related agencies to come up with additional measures to expand the coverage to more groups of people,” he said.

When asked about the extension of excise tax cut on diesel fuel, which will expire on July 20, Arkhom said that there is still time to consider the global price situation. “Currently the price of West Texas crude has gone down by $10 dollar per barrel, but this does not directly impact Thailand’s price as we use Dubai crude as reference,” he said. “Global oil prices can either go up or down next week, while the decision to extend the tax cut must be based on other factors as well, such as the burden on the Oil Fuel Fund.”

BOT told to watch baht closely as it hits lowest in five years

Published : July 06, 2022

By : THE NATION