Thailand Holds Fire on Rates While Currency Concerns Rise
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TheBank of Thailand kept its benchmark interest rate unchanged for a fourth straight meeting to save its limited policy space while concern has shifted to how recent baht strength threatens the economic recovery.
The central bank held the policy rate at 0.5% Wednesday in a unanimous decision, after lowering rates three times earlier this year. All 20 economists in a Bloomberg survey predicted the hold.
Thailand’s economy has shown some encouraging signs as the decline in gross domestic productslowed last quarter, beating estimates. Still, ongoing political protests and the surging currency are weighing on the economy, adding to the case for the central bank to keep some policy space available to use when necessary.
The baht has gained 3.2% against the U.S. dollar over the past month as foreign inflows resumed into local stocks and bonds, trimming its decline on the year to 0.8%.
The government wants the central bank to temper the baht rally, which has driven the currency to 10-month highs against the dollar, threatening exports. Thai Finance Minister Arkhom Termipittayapaisithsaid Monday he’d discuss with the central bank what measures might be needed to restrain the currency.
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