BANGKOK (Reuters) – The rapid rise in the value of the Thai baht is affecting exporters and tourist spending, the Thai central bank said on Monday, adding that the currency was rising due to a weak dollar against strong regional currencies such as the yuan and yen.
The baht hit its highest level in 31 months on Monday at 32.235 to the dollar. It has risen by 5.8% year to date, the second best performance in the region after the Malaysian ringgit.
Exports and tourism are major drivers of Southeast Asia’s second-largest economy.
The baht’s rapid rise comes ahead of a meeting between the central bank and the Ministry of Finance this week, where the performance of the Thai currency and the country’s inflation target are expected to be discussed.
The meeting, which was first reported by Reuters, comes after months of government pressure on the central bank to cut interest rates and align with fiscal policy aimed at stimulating the economy.
The central bank has so far resisted calls for a rate cut, keeping interest rates unchanged at 2.50% for the fifth straight meeting last month and saying a cut is not necessary. The next price review will be held on October 16.
The central bank has managed the baht’s fluctuations, Chiawaddy Chai Anant, assistant governor of Bhutan Bank, told reporters.
The stronger baht affects exporters when converting profits back into baht, she said, adding that it will also affect tourism spending.
The Commerce Bank said that exports rose in August by 11.4% from a year earlier while imports rose by 8.5%, resulting in a trade account surplus of $2.4 billion.
The current account surplus reached $1.4 billion in August, up from a revised surplus of $0.1 billion in July, due to accelerating exports of agricultural products to trading partners facing shortages, the Bank of Commerce said.
The economy grew at a faster pace of 2.3% in the April-June quarter on an annual basis, but analysts said fiscal policy uncertainty cast a shadow over the outlook.
The Transport Bank forecast economic growth of 2.6% for 2024, after last year’s expansion of 1.9%, which lagged behind its peers in the region.