The Thai government has announced that it will work hand in hand with the central bank to curb the rapid appreciation of the baht, according to reuters in an article today. After the currency hit its strongest level in four years, Finance Minister Ekniti Nitithanprapas warned that both capital inflows and gold trading would be closely monitored. Any unusual transactions will be investigated to counter speculation.
Ekniti held talks with Vitai Ratanakorn, who will take office as the new Governor of the Bank of Thailand on October 1. His deputy, Vorapak Tanyawong, admitted that the baht could climb even higher due to continued foreign purchases of Thai bonds and equities.
Following the government’s comments, the baht eased slightly to 31.88 per US dollar, compared with Wednesday’s close of 31.73. Still, it has risen about 8 percent so far this year, marking the second-strongest gain among Asian currencies, only behind the Taiwan dollar.
The currency’s surge has raised concerns as it threatens the competitiveness of Thai exports and puts pressure on the vital tourism sector. In response, the central bank is considering measures such as a potential tax on gold trading. This comes after gold shipments skyrocketed by 82 percent year-on-year between January and July, reaching US$7.6 billion. Notably, exports worth US$2.1 billion went to Cambodia alone.
For Thailand, the stakes are high: if policymakers fail to stabilize the baht, the impact on the economy and financial markets could be severe. The government and central bank now face the challenge of finding the right balance to safeguard growth.
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