InfoQuest (June 1, 2020) -- Thai baht rose at a faster pace than most Asian currencies over the past two weeks, the Bank of Thailand is poised to consider measures necessary to prevent the currency's upward streak from exacerbating the country's current fragile economy, said Mr. Mathee Supapongse, deputy governor of Monetary Stability, Bank of Thailand.
The appreciation of the baht is partly attributed to the facts that the COVID-19 situation in Thailand is better than other countries and the economic data for the first quarter of 2020 was better than the market expected. The central bank is concerned that the swift appreciation of the baht is not in line with the country's fragile economic conditions, as the COVID-19 outbreak has had a severe impact on many sectors of the economy, as will be evident in the second-quarter economic data report.
In addition, the central bank will review gold traders' trades against established criteria and consider additional measures to mitigate the impact on the exchange rate as the recent rise in gold prices puts pressure on the baht to appreciate.
The current easing of COVID-19 situation in Thailand and Asia could make Asian currencies, including the baht, attractive to some investors as a short-term safe haven, something the Thai central bank does not want.
Mr. Mathee said that the future rapid changes in the epidemic situation and in the world financial markets, coupled with transactions related to direct investment by the public and private sectors, may cause the baht to move in the opposite direction for a period of time. Therefore, the central bank advises that those who use foreign currencies to trade should guard against risks related to the exchange rate of the baht, so as to cope with its two-way fluctuations in the future.
Source: InfoQuest, by Kasamarporn Kittisamphan / Sasithorn, translated by Xinhua Silk Road
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