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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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Free AccessMNI INSIGHT: Thai CB Holds, Eyes Fed And Baht As Tourists Return
Pressure has come off Thailand's central bank to ease interest rates as the baht has strengthened and the economy is set to re-open to tourists in November.
While the Bank of Thailand kept its one day repurchase rate unchanged at the record low of 0.50% at its last meeting in September, two members of the Monetary Policy Committee advocated a rate cut in August to help the economy through the pandemic, see: MNI STATE OF PLAY: Bank Of Thailand Upgrades 2022 Growth.
BAHT GAINS
MNI understands that dovish sentiment at the BoT has waned as the baht has strengthened to 30 against the USD, the vaccination programme has rolled out and the critical tourism sector is set for re-opening.
While the baht is expected to weaken slightly next year, MNI also understands that at the current level of 30 to the USD the currency is marginally higher than the central bank would prefer, as it might impact on key export industries.
But the prospect of the U.S. Federal Reserve raising rates as soon as next year also could bring the currency under pressure.
With inflation low at just under 1.7% and the baht comparatively strong, MNI understands the BoT is quietly confident that it well placed to withstand any repeat of the 2013 "temper tantrum" as global inflation gains momentum next year and the Fed is likely to move into a tightening cycle.
With the economy re-opening and recent export figures strong, the mood at the BoT is cautiously optimistic for 2022, with the bank now returning to its earlier 2022 growth forecast of 3.9%.
OTHER MEASURES
The BoT is understood to have shifted its immediate focus away from interest rate policy and towards other measures, such as last week's move to ease loan-to-value ratios for mortgage lending to allow homebuyers to borrow up to 100% of the purchase price.
This week, the bank also extended a corporate bond stabilisation fund for another year to the end of 2022 to support businesses impacted by the pandemic.
The Thai government has also been active in fiscal policy, approving the distribution of another USD1.63 billion to low-income earners, the elderly and people with disabilities.
This came from a USD16 billion loan the government took out earlier this year.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.