Thai economic recovery slows but zero pct policy rate unlikely

[snoop1130]

Thai economic recovery slows but zero pct policy rate unlikely

By Kitiphong Thaichareon and Orathai Sriring

 

FILE PHOTO: Thailand's central bank is seen at the Bank of Thailand in Bangkok, Thailand April 26, 2016. REUTERS/Jorge Silva

 

BANGKOK (Reuters) - Thailand's economic activity may not return to levels seen before the COVID-19 pandemic until 2022, but the country's record-low policy interest rate of 0.50% is unlikely to go to zero percent, the central bank said on Tuesday.

 

The Bank of Thailand (BOT) has forecast the trade-and-tourism driven economy will shrink by a record 8.1% this year, with foreign tourist numbers plunging 80%, as the pandemic cuts global demand and travel. It said the forecast was tilted to the downside.

 

The economy should gradually recover after hitting bottom in the second quarter, Governor Veerathai Santiprabhob told an analyst meeting.

 

"The outbreak will continue, possibly with more cases. But the government should be able to handle that and there is no need for strong measures yet," Veerathai said. Thailand has recorded no local transmission of the coronavirus in about seven weeks.

 

The BOT has cut its policy rate <THCBIR=ECI> three times this year to 0.50% to cushion the outbreak impact on Southeast Asia's second-largest economy.

 

"The policy rate at zero percent may be difficult to occur because it will affect the economic system and savings," said Deputy BOT Governor Mathee Supapongse.

 

Policy space should be preserved for the worst, said the BOT, which left rates unchanged last month and will next review policy on Aug. 5.

 

The BOT will smooth out excessive moves in the baht <THB=TH> and allow more trading of gold and commodities in U.S. dollars to reduce the impact on the Thai currency, Mathee said.

 

"Gold trading is still largely in baht," he said, adding more rules would be made clear this year.

 

The BOT is not worried Thailand will be named a currency manipulator by Washington. "We have discussed with the U.S. Treasury and they understand our monetary policy implementation," Veerathai said.

 

The BOT is examining yield curve controls, though quantitative easing may not help the economic recovery given ample liquidity, Mathee said.

 

-- © Copyright Reuters 2020-07-14

 

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[Isaan sailor]

As long as the Baht remains overpriced, the economy will suffer.  Wuhan virus only affects international tourism.  They should know this by now.

[Baerboxer]

1 hour ago, Isaan sailor said:

As long as the Baht remains overpriced, the economy will suffer.  Wuhan virus only affects international tourism.  They should know this by now.

 

You should contact the international money brokers and investors and explain that you believe the Thai baht to be very overpriced. You might spark a massive sell off and crash.

[robblok]

8 minutes ago, Baerboxer said:

 

You should contact the international money brokers and investors and explain that you believe the Thai baht to be very overpriced. You might spark a massive sell off and crash.

Its amazing how Thaivisa posters always seem to know it better then the financial world. I for one would love it if the baht drops but people have been predicting it for ages it never happened. 

[khunPer]

2 hours ago, Isaan sailor said:

As long as the Baht remains overpriced, the economy will suffer.  Wuhan virus only affects international tourism.  They should know this by now.

Always look at the bright side of life: I remember that I got less baht for my foreign currency than now when visiting Thailand first time in 1987, so after all that baht is not as bad as it once was...????????

[laocowboy2]

13 minutes ago, khunPer said:

Always look at the bright side of life: I remember that I got less baht for my foreign currency than now when visiting Thailand first time in 1987, so after all that baht is not as bad as it once was...????????

True - but in those days you could have a pretty good night out for less than THB1,000

[khunPer]

41 minutes ago, laocowboy2 said:

True - but in those days you could have a pretty good night out for less than THB1,000

In my home country's consumer price index the equivalent value of 1,000 baht in 1987 would be almost 2,000 baht today, and on top I would get tiny bit more baht for my foreign currency now, than back then.

 

So for 2,000 baht today the question then is, what does a "pretty good night out" include – just for comparison – some things might have had a higher rate of inflation than others...

[sammieuk1]

The ample liquidity is in the pockets of the top 1% so there will be no helicopter money for the other 99% your on your own by the look of it ????