Thailand: BoT: Baht gain up for discussion

  • The Bank of Thailand has summoned foreign exchange dealers to meet on 4 Jun 20 to discuss the baht’s rapid gain, which it considers out of line with the economy.
  • The discussion could focus on the baht’s reversal to a top performer in Asia from the weakest over Jan-Apr 20, as well as gold trading that has been blamed for a portion of the baht’s fast appreciation, Tak Bunnag, head of global markets group at Bank of Ayudhya, who added that “the regulator may want to share information with foreign exchange traders to attempt to tame the baht’s rise.”
  • An influx of foreign capital inflows followed a better than expected 1Q20 economic reading as well as Thailand’s ability to contain the pandemic.
  • The baht has risen 0.79% against the greenback since the beginning of Jun 20, hitting 31.55 on 2 Jun 20, the highest level in nearly three months. The currency gained 1.8% in May 20, the biggest monthly increase in 2020. Yet the currency has dipped 5.2% year-to-date.
  • Mathee Supapongse, deputy governor of the BoT, said the surge in gold prices played a role in pushing up the baht, so the central bank will examine gold dealers’ transactions and whether they complied with regulations, as well as consider additional measures to curb the baht’s rise.
  • The Monetary Policy Committee is scheduled to release its forecasts on economic growth, inflation and current account balance at the upcoming meeting on 24 Jun 20.
  • Meanwhile, Kasikornbank’s head of capital markets business Thiti Tantikulanan said offshore capital has been spotted flowing into Asian markets as investors shun the dollar.
  • The improving economic prospects of Asia and current account surpluses in some countries are soliciting overseas fund inflows, including in the Thai bourse this week, he said.

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