The Thai baht has risen steadily against the dollar recently, outperforming regional peers and sparking worries that the country's exports would become less competitive. (Source: Reuters)
Bangkok (VNA) - The Thai baht has staged a strongrecovery against US dollar after suffering a brief sell-off earlier this year,but the Thai Government is increasingly worried that continual strength in thecurrency could hit exports.
Exporters have complained that the stronger baht has madetheir products uncompetitive in foreign markets.
Statisticsshow that by mid-September, the baht was trading at around32.6 baht/USD. The baht hit31.11 against the USD in mid-August, a level not reached since October 2013 andmarking the strongest rate it was traded at under the military regime.
The baht fell to 33.52 against the USD in mid-July, in linewith a broad sell-off in emerging market currencies and as the USDstrengthened. So far this year, the baht has lost just 0.2 percent in valueagainst the USD, compared with an 8.4 percent fall in the Indonesian rupiah and7.6 percent drop in the Philippine peso.
Thailand's current account surplus and high foreign exchangereserves are considered important factors for the baht to keep its value.According to the International Monetary Fund (IMF), Thailand'scurrent account balance accounted for 10.8 percent of GDP in 2017, the eighthhighest in the world.
Analysts said that investors will continue to buy the baht before the forecast thatThailand will raise interest rates. The Central Bank of Thailand (BoT) hasmaintained its interest rate at 1.5 percent since the rate cut in April 2015. Since 2011, Thailand has not raised interestrates yet.
Recently, BoT Governor Veerathai Santiprabhobsaid the Thai Government is concerned that anumber of investors are buying their funds in Thailand’s short-term bonds, thatand the Southeast Asian country has more inflows than its neighbours who do not have suchstrong current account balance like Thailand.
There is yet another reason for investors to plow into the baht. Thailand isheading for a general election next year, raising hopes for a return tocivilian rule for the first time in more than four years.-VNA
