Thailand has policy room to handle baht gains - finance minister

By Kitiphong Thaichareon

 

 

BANGKOK (Reuters) - Thailand has room to use fiscal and monetary measures to manage the strength of the baht <THB=TH> but there is no need to use tax measures yet, the country's finance minister said on Friday.

 

Southeast Asia's second-largest economy is heavily reliant on exports, which have been hit by the Sino-U.S. trade tension. Currency appreciation has added to the pressure.

 

Uttama Savanayana told reporters that he would work closely with the central bank to manage the baht, which rose nearly 9% against the U.S. dollar in 2019, making it Asia's best-performing major currency.

 

"There is room, for both fiscal and monetary measures, that can be implemented," he said.

 

"Now it's still the duty of the central bank to take care of this. Additional steps will be introduced as appropriate".

 

Despite the central bank's earlier measures and two cuts in the benchmark interest rate to a record low of 1.25% in 2019, the baht remains firm, underpinned by the country's large current account surplus.

 

The currency traded at 30.15 per U.S. dollar on Friday, after hitting 29.91 on Monday, the highest in more than six years.

 

The strong baht also threatens tourism, another key growth driver, at a time of soft domestic demand.

 

However, Uttama said he expected this year's economic growth to be higher than 2019 and was preparing additional measures to help stimulate domestic activity.

 

On Tuesday, the ministry will propose measures to the cabinet worth more than 100 billion baht ($3.32 billion), including soft loans, to help small and medium enterprises, he said.

 

The central bank expects economic growth of 2.8% this year and 2.5% in 2019, which would be the weakest pace since 2014, when there was an army coup.

 

-- © Copyright Reuters 2020-01-02

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The looming tensions in the Middle East and the distinct possibility of a wider US involved conflict may well change everything, for everyone.  Let's see how the Baht performs when the economic implications of outright War are factored in.  It didn't do too well last time it happened.  

11 minutes ago, snoop1130 said:

"There is room, for both fiscal and monetary measures, that can be implemented," he said.

 

"Now it's still the duty of the central bank to take care of this. Additional steps will be introduced as appropriate".

 

Despite the central bank's earlier measures and two cuts in the benchmark interest rate to a record low of 1.25% in 2019, the baht remains firm, underpinned by the country's large current account surplus.

It's so obvious they are not interested at all to change it (We all know what is the final plan)

 

It's actualy so easy to 'import'' as foreign money as you want in Thailand

and on the other hand it's so difficult to ''export'' your money outside of Thailand

it's just ridiculous, and no surprise here about the country large current account surplus.

 

All the rest is just hot air

16 hours ago, Pilotman said:

Let's see how the Baht performs when the economic implications of outright War are factored in.

Ah, a new nuclear radiation half life 200 year visa option, good thinking

16 hours ago, snoop1130 said:

There is room, for both fiscal and monetary measures, that can be implemented," he said.

 

So do it instead of talking about it. Jeez!

18 hours ago, snoop1130 said:

"Now it's still the duty of the central bank to take care of this. Additional steps will be introduced as appropriate".

Translation: We don't intend on doing anything at all about this.

If the intention is to do something then do it. 

 

He who pays the piper calls the tune.

 

He who calls the tune  benefits more the stronger the Baht gets.

 

"So einfach Ist das" as they say in Bavaria. 

Edited January 4, 20206 yr by JAG

18 hours ago, Pilotman said:

Let's see how the Baht performs when the economic implications of outright War are factored in.  It didn't do too well last time it happened.  

Lost me, what happened? The Baht has been pretty consistent since 97, less I slept through a few years which wouldn't be a huge surprise.

19 hours ago, Pilotman said:

The looming tensions in the Middle East and the distinct possibility of a wider US involved conflict may well change everything, for everyone.  Let's see how the Baht performs when the economic implications of outright War are factored in.  It didn't do too well last time it happened.  

Could also be the opposite as it seems like Thai baht are being used as "safe haven"...????

19 hours ago, snoop1130 said:

Thailand has policy room to handle baht gains - finance minister

It must be an age thing, when you said "policy room" I had an entirely different image in mind!

 

1 hour ago, khunPer said:

Could also be the opposite as it seems like Thai baht are being used as "safe haven"...????

In war,  history tells us that investors retreat to the old  hard currencies,  US dollar being prime, then Euro, Yen and Pound sterling .  The Thai Baht is a temporary  aberration that will not, cannot last. The Thai economy has not got the global reach or financial muscle to sustain a hard currency.  

1 hour ago, CGW said:

Lost me, what happened? The Baht has been pretty consistent since 97, less I slept through a few years which wouldn't be a huge surprise.

You have and it hasn't. The rise of the Baht is a relatively recent and I think temporary phenomena. 

30 minutes ago, Pilotman said:

In war,  history tells us that investors retreat to the old  hard currencies,  US dollar being prime, then Euro, Yen and Pound sterling .  The Thai Baht is a temporary  aberration that will not, cannot last. The Thai economy has not got the global reach or financial muscle to sustain a hard currency.  

Thanks for your view. However, time is changing, general negative interest was for example not a part of common financial knowledge, and Euro is a newer currency with lots of weak points, whilst Pounds is a question due to Brexit; it could also be strengthened. US, Europe and Great Britain may all be part in a Gulf-conflict – or war-like situation – whilst Southeast Asia might not. History might work rather as history here, than prediction of a financial future.

1 hour ago, Pilotman said:

You have and it hasn't. The rise of the Baht is a relatively recent and I think temporary phenomena. 

I would say there is more than me suffering from "temporary phenomena" ????

 

Apparently, they’re quite happy with the loss of western tourists and exports.  So they will do nothing, right?

4 hours ago, khunPer said:

Thanks for your view. However, time is changing, general negative interest was for example not a part of common financial knowledge, and Euro is a newer currency with lots of weak points, whilst Pounds is a question due to Brexit; it could also be strengthened. US, Europe and Great Britain may all be part in a Gulf-conflict – or war-like situation – whilst Southeast Asia might not. History might work rather as history here, than prediction of a financial future.

after 2008 one would expect that the global financial structure would have changed, but it hasn't.  There in lies both a strength and a weakness.  Thailand cannot compete with global powers like the US, China, EU and I have to say the UK, even outside the EU. Just consider what would happen if the Uk's biggest bank, RBS, went bust, just as Lehman Bros did back in the day, it would trigger another 2008, same for all the major US banks.  if a Thai bank, any Thai bank, went bust, the  financial ripples would not be felt much past the boundaries of Asia, if that far.  That is the actuality of the global financial structure, as is, and investors are very well aware of that. 

Edited January 4, 20206 yr by Pilotman

On 1/3/2020 at 5:43 PM, snoop1130 said:

"Now it's still the duty of the central bank to take care of this.

BOT has - with inflated expectations of doing nothing:

• Dec. 31, 2019: BOT will closely monitor the market and act as necessary to steer the exchange rate back into line with Thailand’s economic fundamentals.
• Jan. 02, 2020: BOT will closely monitor the exchange rate market after the baht has been highly volatile as the market adjusts to a new equilibrium between market forces of buying and selling the U.S. dollar.

Despite BOT's warning:

• Dec. 17, 2019: The Bank of Thailand earlier warned importers and exporters to brace for a two-way movement of the baht in an attempt to sway market sentiment which heavily bets on continuous appreciation of the Thai currency.