Central Bank Rhetoric Draws Attention

Plenty of rhetoric surrounding the Bank of Thailand today, as Governor Sethaput spoke in a panel discussion, while the Monetary Policy Committee released the minutes from their most recent monetary policy meeting, which saw policymakers leave their key policy rate at 0.50%.

• Worth noting that the Committee observed in their minutes that "the baht exhibited more volatile movements than its regional peers due mainly to domestic factors." They added that "exchange rate volatility could have adverse impacts on businesses during the recovery phase" but local firms (mostly large corporations) "carried out more foreign exchange hedging transactions recently."
• BoT Gov Sethaput pointed to the need for synchronised targeted monetary and fiscal policies. The Governor noted that higher global interest rates have limited impact on Thailand, owing to low foreign participation in the local bond market. He also pushed back against the potential for the BoT to deploy quantitative easing, noting that domestic SMEs do not use the bond market for funds.
• Meanwhile, FinMin Arkhom suggested that fiscal policies are focused on tackling the Covid-19 situation and supporting growth, adding that Thailand could be fully reopened next year.
• On a different front, PM Prayuth pushed back against the possibility of dissolving the House of Representatives before the process of amending Thailand's electoral laws is completed.
• Spot USD/THB last trades +0.120 at THB33.225, narrowing in on its 50-DMA at THB33.267. A clean breach of that moving average would shift focus to Oct 18 high of THB33.488. Conversely, bears look for a dip through Nov 18 low of THB32.565.