The Bank of Thailand reiterated its concern about the baht’s persistent strength on Wednesday, but said cutting the key interest rate may have only a limited impact in dealing with currency’s ascent and instead flagged a preference for using a range of tools.
The bank plans to ease rules on money outflows by giving more flexibility for portfolio investment by Thai investors, Deputy Governor Mathee Supapongse said at a briefing in Bangkok. Reducing the bond supply is also among the tools officials are ready to use, according to Governor Veerathai Santiprabhob.
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The central bank last week took steps to curb short-term inflows and restrict the currency’s surge, concerned that a stronger baht will further damage an export-reliant economy that’s already been hit by weaker global demand and trade tensions. The BOT last month lowered its growth projection for 2019 to 3.3% from 3.8% and forecast zero expansion in exports.
Cutting the key rate may have limited impact as Thailand’s real rate is low versus regional countries, Veerathai said.
The bank is closely tracking the currency, which has been boosted by a high current account surplus, he said.
Veerathai had said July 8 the BOT was ready to adjust rates to respond to risks, raising the prospect of a possible cut in coming months following December’s hike.
Regional central banks from India to Australia have eased policy this year to bolster their economies amid a worsening global slowdown.