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Baht keeps strength despite coronavirus outbreak, economic decline

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Baht keeps strength despite coronavirus outbreak, economic decline

By The Nation

 

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The Thai economy in 2020 would expand at a much lower rate than previous forecast and way below its full potential, mainly due to the combined impact from the coronavirus outbreak, delay to enactment of the Annual Budget Expenditure Act and drought on a large number of businesses and employment, according to the minutes released today by the Monetary Policy Committee of the Bank of Thailand .

 

 On February 5 ,  the committee  voted unanimously to cut the policy rate by 0.25 percentage point from 1.25 to 1.00 per cent, in a bid to shore up the economy.

 

Regarding exchange rates, the committee said although the Thai baht depreciated somewhat in recent days , it remained potentially inconsistent with economic fundamentals. During  inter-meeting period, the currency depreciated against the US dollar. The baht also depreciated against regional currencies as reflected by a decline in nominal effective exchange rate (NEER) despite its high level compared with that in the past. The recent  depreciation was mainly a result of  investors’ concerns over the softening outlook of  the Thai economy,  from both domestic and external prespectives , as well as the Bank of Thailand’s relaxation of foreign exchange regulations to facilitate capital outflows. 

 

Investors started to view that the baht could depreciate after a substantial appreciation last year, the report said. 

 

Meanwhile, a divergence in the trends of the baht and the prices of gold, a safe-haven asset, was more prominent amid the  coronavirus outbreak ,  reflecting a diminishing safe-haven status of baht-denominated assets from the investors’ perspective, according the central bank.

 

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In an interview, Kobsidthi Silpachai, head of capital markets research at Kasikornbank told the Nation that the baht is currently 5.6 per cent overvalued.

 

While the country would have lower current account surplus this year, it still remains high, he said. Kasikornbank has lowered its projection of current account surplus to US$33 billion this year, down from the previous forecast of $33.8 billion, he said.

 

He said imports was  still falling faster than exports, resulting in a continuous  surplus of the current account, the  main factor behind the baht's appreciation.

 

The weighted- average interbank exchange rate was Bt 31.187  per dollar  at the close of trade on February 19, according to the central bank.

 

Many research houses have revised downward their economic growth forecast to below 2 per cent rate this year.

 

Source: https://www.nationthailand.com/business/30382434

 

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-- © Copyright The Nation Thailand 2020-02-20
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4 hours ago, webfact said:

Many research houses have revised downward their economic growth forecast to below 2 per cent rate this year.

I think the bang will be huge in 2020 and in future years!

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As Confucius said "Man who want money to work for him should work in a bank"  Mr Wong was his real name, but my smart Rs older brother named him Confucius.....and the name stuck!

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1 minute ago, NCC1701A said:

36 to the USD is the best you can hope for sometime in the next 5 years. 

 

that is it. then a return to maybe as low as 25 to the USD.

 

sometime after 2040 the Thai Baht will be the new global safe haven currency and the economic powerhouse of the entire world. everyone will speak Thai. Cities all over the world will be plunged into darkness but Bangkok will be the engine of the world.   

I agree with the first part of your post, the jury is out on the rest of it however. :unsure:

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