BOT intervenes as baht strengthens to lead regional currencies

Pimpan Charoenkwan, assistant governor for the financial markets group at the BOT, said the central bank was closely monitoring the situation and would step in to curb volatility in order to reduce the impact on businesses.

She noted that the recent appreciation of regional currencies, including the baht, was largely driven by the weakening of the US dollar as markets increasingly expect the Federal Reserve (Fed) to ease monetary policy.

The baht has also come under upward pressure from a continued rise in global gold prices. The BOT is currently exploring measures to mitigate the impact of gold price movements on the exchange rate.

Pimpan advised the private sector to consistently hedge against foreign exchange risks in order to cushion the effects of market volatility.

Meanwhile, Sanguan Jungsakul, senior director for money and capital markets at Krungthai Bank, described the baht’s recent rally as “sharp and significant.”

Since Friday (September 5), the baht has gained more than any other regional currency, strengthening beyond the 32.00 level to stand at 31.81 to the US dollar as of the latest trade — its strongest point in more than four years, since mid-2021.

He attributed the surge to the continued rally in gold prices, expectations of a Fed rate cut in September amid signs of a US economic slowdown, and greater political clarity in Thailand following the formation of a new government.