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Thailand’s Finance Minister on Wednesday told the Bank of Thailand (BoT) to prepare to address the weakening of the Thai baht, which has fallen against the US dollar to its lowest level since December 2015.
As of Wednesday afternoon, the baht has slumped to 36.07 against the US dollar.
Trading in safe-haven assets has dominated global markets amid recession fears from interest-rate hikes, with US treasuries and the US dollar rising while other currencies falling.
Minister Arkhom Termpittayapaisith said the situation of the baht is a result of external factors.
“Currently, the baht is still volatile and continues to weaken.” Arkhom said. “The Bank of Thailand must closely monitor the baht’s position.”
The baht has weakened as much as 5 per cent against the US dollar so far this year, a point that could prompt the BoT to intervene in the currency market by buying baht and selling US dollars to beef up the baht value.
Although the weakening baht will favor the tourist industry and exporters, it will inevitably raise the costs of industries that rely on imports, such as auto parts and electronic processors.
“Overall, investors are still optimistic on the Thai bond market,” Arkhom noted. “While fund outflows from the stock market are influenced by global events.”