Bank of Thailand ready to respond if baht gets too volatile
The Bank of Thailand (BOT) is monitoring the baht and will take steps to tackle abnormal volatility immediately, so it does not affect economic recovery.
BOT governor Sethaput Suthiwartnarueput said on Friday that the central bank does not want to see abnormally fast and high fluctuations, especially since the baht is weakening.
However, he said, the central bank can only step in if the currency’s volatility starts affecting importers and exporters who cannot use hedging tools.
He added that the BOT has not set a target for the baht, as it depends mainly on the dollar, which has strengthened by 18 per cent. The baht, meanwhile, has weakened by 12 per cent, which is moderate when compared to other countries.
Sethaput believes the baht’s weakening will not boost inflation by much, because the rate of inflation has only risen by 0.06 per cent for every 1 per cent weakening of the baht.
He also does not expect a recurrence of the 1997 Asian financial crisis, as the country’s economy is strong.
He said the Bank of Thailand was ready to adjust the rate of interest if necessary, especially if the country’s economic situation is not where it should be.
Sethaput added that the central bank is monitoring core inflation, especially after it rose for four consecutive months and eventually reduced last month.
He believes the core inflation rate will be 6.3 per cent this year and less than 3 per cent next year.
He went on to say that the bank will hold an extraordinary meeting if the situation changes, especially since the Monetary Policy Committee now only meets six times a year.
