Shoppers pass through a street market in Bangkok, Thailand.(Photo:bloomberg.com)
Hanoi (VNA) – Thailand's currency THB mayextend its recent declines to test support at last year’s low amid growingpressure on the central bank to cut interest rates, according to the US website Bloomberg.com.
The currency has already dropped almost 7% since thestart of January, making it one of Asia’s worst performers, and putting it lessthan 1.4% away from October’s low of 37.237 per dollar. Some analystssee that level being tested if the Bank of Thailand trims its benchmark on April10.
While economists expect BoT policymakers to furtherdelay rate hikes this week, traders were cautious after the two BoT membersvoted in favour of a rate cut at their previous meeting in February. In the samemonth, Prime Minister Srettha Thavisin's government called for an emergencyrate cut.
Currently, theBoT is applying an interest rate of 2.5%. Moh Siong Sim, foreign exchangestrategist at Bank of Singapore Ltd, said "headwinds" from financialinstability can continue to weigh on the THB in the near term. Besides, weakdomestic consumption, deflation and the prospect of the BoT lowering interestrates in the future are negatively affecting the currency’s outlook.
Nicholas Chia, strategist at Standard Chartered BankSG, acknowledged that the BoT will cut interest rates and this will affect theTHB. In addition, the signal that the US Federal Reserve (Fed) is not in ahurry to cut interest rates until inflation is under control is also a negativefactor for the THB.
Moreover, the THB has been put under pressure when sincethe beginning of this year to April 3, global funds sold 1.9 billion USD worthof Thai shares amid concerns that a slowing economy will reduce corporateearnings.
Thailand's economycontracted by 0.6% in the fourth quarter of 2023. This is the worst figuresince the end of 2022./.
