Shoppers pass through a street market in Bangkok, Thailand.(Photo:bloomberg.com)
Hanoi (VNA) – Thailand's currency THB may extend its recent declines to test support at last year’s low amid growing pressure on the central bank to cut interest rates, according to the US website Bloomberg.com.
The currency has already dropped almost 7% since the start of January, making it one of Asia’s worst performers, and putting it less than 1.4% away from October’s low of 37.237 per dollar. Some analysts see that level being tested if the Bank of Thailand trims its benchmark on April 10.
While economists expect BoT policymakers to further delay rate hikes this week, traders were cautious after the two BoT members voted in favour of a rate cut at their previous meeting in February. In the same month, Prime Minister Srettha Thavisin's government called for an emergency rate cut.
Currently, the BoT is applying an interest rate of 2.5%. Moh Siong Sim, foreign exchange strategist at Bank of Singapore Ltd, said "headwinds" from financial instability can continue to weigh on the THB in the near term. Besides, weak domestic consumption, deflation and the prospect of the BoT lowering interest rates in the future are negatively affecting the currency’s outlook.
Nicholas Chia, strategist at Standard Chartered Bank SG, acknowledged that the BoT will cut interest rates and this will affect the THB. In addition, the signal that the US Federal Reserve (Fed) is not in a hurry to cut interest rates until inflation is under control is also a negative factor for the THB.
Moreover, the THB has been put under pressure when since the beginning of this year to April 3, global funds sold 1.9 billion USD worth of Thai shares amid concerns that a slowing economy will reduce corporate earnings.
Thailand's economy contracted by 0.6% in the fourth quarter of 2023. This is the worst figure since the end of 2022./.
