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Thai Baht predicted to fall further

Samui Times Editor

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Thai Baht predicted to fall further | Samui Times

‘A change is gonna come’ for the Thai baht.

In only a short amount of time the Thai baht has fluctuated drastically, as only months ago The Bank of Thailand (Bot) was considering to take harsh measures to moderate the popular Thai baht.

Kasikorn Bank released a report outlining the reasons of the Thai baht “will remain strong into 2020” last December. The bank forecasted that the baht would more in a range of 30.1 – 30.5 baht to the USD.

“At least for the next few quarters.”

They also warned, due to the strengthening of the Thai baht, that Thailand’s November (2018) export data would likely be in a negative territory.

But today, the exchange rate is 32.79 USD to 1 THB

Since those day have now passed, the Thai Baht is predicted to take a fall further as the BoT has decided to cut interest rates to manage the impact of the covid-19 coronavirus. This decision come into play with a mass of announcements on Friday night, including an emergency rate cut.

The new measures can only be described as a further blow for the Thai baht. There is also the issue of slow economic growth, the worst drought Thailand has seen in decades and, to top it off, a political quibble that ended up making delays in government funding.

Last Friday’s move to cut rates by 25 basis points led to a new record low of 0.75%. It was the second reduction in as many months, coming ahead of today’s scheduled policy meeting. The policy committee says the virus outbreak is likely to be “more severe” than previously thought and it will “take time for the situation to normalise.”

The BoT’s benchmark rate is now just a fraction above the level of inflation, putting Thailand on the edge of joining the list of nations with negative real policy rates.

“The odds of a recession over the next 12 months have jumped to 30% from just 10% a year ago. Across Asia, only Japan has a higher probability”, according to Bloomberg surveys of economists.

Thai  finance policymakers went before the media on Sunday, saying they’ll set up a mechanism to allow banks to use money market and bond funds for collateral to enhance liquidity and make funds available for companies to refinance corporate bonds.

The coronavirus has already taken its toll on Thailand’s newly-struggling currency, decimating the nation’s tourism industry, largely by reducing visitors from China, who alone accounted for some 3% of the country’s gross domestic product. Tourism revenue has slumped 43% in February from a year earlier. Furthermore exports tumbled 4.5% the same month, according to a Bloomberg report.

SOURCE: Chiang Rai Times | The Thaiger

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