Baht Finds Incremental Support In BoT Tightening Pledge

Spot USD/THB nudged away from session highs as BoT Gov Sethaput dialled up the hawkish overtones in his rhetoric, pointing to the need to adjust monetary policy "near the normal level from super accommodative approach."

• The Governor flagged "clear signs of economic recovery," backing his claims with economic forecasts showing that Q2 GDP likely surpassed +3.0% Y/Y. He noted that the Bank cannot be as aggressive as some of its peers as the pace of Thailand's economic recovery lagged, which means tightening will be gradual. Still, focus now shifts to the growing risk of accelerating inflation. While the Bank is not planning to hold an off-cycle meeting, it sees the need to deliver an early rate hike to avoid steeper tightening further down the road.
• The pair last deals -0.052 at THB36.863, respecting the confines of yesterday's range. The baht remains on track to finish this week as the worst performer in emerging Asia, by a comfortable margin.