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The Bank of Thailand (BoT) said on Friday that it would allow the baht to fluctuate in line with market factors. However, action is required if the currency witnesses extreme volatility, it said.
This week the baht has weakened to its lowest level in almost seven years, approaching 36.32 baht against the US dollar.
BoT senior director Daranee Saeju said in a briefing that the baht has weakened modestly in comparison to regional currencies, and this has been driven by the rise of the US dollar.
According to the official, The BoT did not set its preferred level of the baht.
The Finance Minister, Arkhom Termpittayapaisith, has told the BoT to prepare for intervention targeting the weakening of the local currency, while assuring the stability of the country’s financial system.
Earlier the BoT remarked that the domestic financial markets continue to function normally amid higher volatility stemming from the overseas markets.
“Commercial banks hold ample levels of capital and loan loss provisions,” it said. “Securities companies and insurance companies as a whole are financially robust.”
The upcoming Monetary Policy Committee (MPC) will be held on August 10.
To curb inflation, the BoT has recently hinted at hiking the policy rate, which is now at a record low of 0.50 percent. A hike of 0.25 per cent as the first step is widely expected by economists.