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What's your baht worth? Exchange rates on the street...


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The economy is experiencing low growth because of high interest rates and a strong baht, said Suchart Thada-Thamrongvech, Former Finance Minister during the Somchai Wongsawat administration.

Suchart also played down concerns about capital outflow resulting from the lowering of the policy interest rate by pointing out that the country also has high international reserves at US$252 billion.

The Stock Exchange of Thailand declined by 15.2% to close at 1,415.85 points in 2023, making it one of the worst performers last year. The index also reached a new three-year low in January, closing at 1,364.52, down 3.6% month-on-month, with an average daily turnover of 45 billion baht. Foreign investors sold more than 192 billion baht worth of Thai shares in 2023. They have also sold more than 28.8 billion baht year to date.

Suchart stated that there is nothing to be concerned about regarding the outflow of short-term capital seeking profit from speculations in the stock market. He said lowering the benchmark lending rate will also lead to a weaker baht, supporting tourism and attracting more Foreign Direct Investment (FDI).

He said once the economy expands, both long-term and short-term capital will flow into the country naturally, similar to what is happening in Japan right now.

He added that Vietnam's economy is expanding at an average rate of 5%, while Thailand's economy is stuck at around 1.8% due to Thailand's lack of competitiveness, especially concerning the strong baht when compared to other currencies in the region.

He also noted that investments from China are going to Vietnam, Indonesia, and Malaysia because their currencies are much weaker than the Thai baht. The baht was trading at around 35.8 baht per greenback today compared to 34.28 baht at the beginning of the year.

The Bank of Thailand (BoT)'s Monetary Policy Committee (MPC) voted 5-2 to maintain the policy rate at 2.5% at its February meeting. The government has been pressuring the BoT to lower the rate as the disbursement of the fiscal 2024 budget will be delayed by more than 6 months and is not expected to be disbursed until April, as the 2024 budget bill is still in its second and third readings in the lower house. The MPC's next meeting is scheduled for April 10.

 

 

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